South Shore Holdings Limited, owner and operator of embattled Macau hotel THE 13, will convene a mandatory Special General Meeting next month after a substantial shareholder requested a vote on winding up the company.
In a Wednesday filing, South Shore revealed that it had received a letter from Global Allocation Fund, which holds 101,339,084 shares in the company representing a 10% stake, last month requesting the SGM for the purpose of considering the winding up resolution.
The reasons given by Global Allocation Fund were, according to South Shore, “the net liabilities position of the Group, the suspension of operations of the Hotel and the poor performance of the Hotel generally.”
It added that, “The Requisitionist expresses its belief that the remaining value in the Company will best be maximized with an independent unwind process supervised by a court.”
The shareholder request comes seven months after South Shore was forced to apply to its bank for a “standstill” to prevent enforcement of security over THE 13 Hotel in Macau and liquidation of the company. That application was in response to the bank issuing a demand for immediate payment of HK$2.48 billion owing under its facility agreement, with South Shore having stated it was unable to make a HK$470 million payment due on 31 March 2020.
Last week the company outlines plans to try and sell THE 13 before the end of its financial year on 31 March 2021.
Global Allocation Fund has already flexed its muscle this year, having twice called for board members – namely Mr Lau Tom Ko Yuen and Mr Tse Cho Tseung – to be removed. Both stepped down of their own accord before any shareholder vote was required.
However, South Shore said it doesn’t expect this latest move by Global Allocation Fund to prove so effective, stating, “Shareholders and investors of the Company holding some 25% of the issued share capital of the Company have expressed their opposition to the winding up of the Company.
“Given this opposition, the Board expects that it is almost a certainty that the proposed resolution will not be passed by the requisite majority.”
The company added that, were the Company to be wound up, “the value of the Company would be irreversibly destroyed, with likely no recovery for Shareholders. The Company has worked hard to stabilize the position in respect of bank loans in the principal amount of approximately HK$2.84 billion that are currently due.
“In particular, it continues to seek prospective buyers for the Hotel and to work with its bank on appropriate remedial action. In the meantime, the Board sees no benefit to Shareholders in taking action that might disrupt the otherwise satisfactory performance of the Group’s engineering and management contracting business.”