Macau’s impending bankruptcy decision will see South Shore lose control of the THE 13 hotel, delisted from the Hong Kong Stock Exchange
South Shore Holdings faces the loss of its main asset, THE 13 Hotel in Macau, as well as its delisting from the Hong Kong Stock Exchange if the Macau court officially declares the company bankrupt.
After asking the court this week for the voluntary liquidation of its wholly owned subsidiary New Concordia Hotel Limited, the sole beneficial owner of THE 13 hotel, South Shore issued an additional announcement on the night in which it confirmed that the court would first appoint a liquidator and one or more creditors to assist the liquidator, in order to enable the company to avoid liquidation through approved preventive liquidation measures.
These, he said, could include a debt restructuring plan or a business continuity agreement by creditors.
However, if no action is approved, New Concordia will be declared bankrupt and the liquidator will take possession of the assets and books of the subsidiary.
In such a scenario, South Shore “would lose control of the affiliate property in Macau, including the Macau hotel.” Since the subsidiary constitutes a substantial part of the business of the Company, the loss of control over the assets of the subsidiary will result in insufficient operations of the Company as required by Rule 13.24 of the Registration Rules.
“It is possible that the Exchange will delist the Company, unless the Company is able to implement appropriate measures satisfactory to the Exchange in order to preserve the listing status of the Company.”
South Shore has faced increasing pressure from its lenders to repay growing debts in recent months, including a legal demand issued by a lender demanding payment of HK $ 3.28 billion (US $ 423 million) outstanding loans and interest or faces a liquidation petition against the company.
Another lender terminated the ongoing renewal of a bridging loan last month in the amount of HK $ 593 million (US $ 76.5 million), while exercising its rights under the loan agreement initial to become the owner of the subsidiary that owns the engineering arm of South Shore, Paul Y Engineering Group Limited.
From the imagination of long-deceased President Stephen Hung, THE 13 was envisioned as a luxury hotel with space for 66 VIP gaming tables aimed at capitalizing on Macau’s booming VIP segment in the early 2010s. Instead, a series of funding and construction delays saw the property open in September 2018 with no clearance and a number of unfinished rooms – all at a cost of $ 1.6 billion.
New Concordia itself has raised funds lately through the sale of most of its fleet of 30 Rolls-Royce Phantoms, purchased in 2016 at a cost of $ 20 million. Twenty-four of these Phantoms were sold for a combined HK $ 24 million in 2019 to pay off debts, while another was sold earlier this year for HK $ 3.5 million ($ 450,000 US).