South Shore Holdings is facing the loss of its primary asset, THE 13 Hotel in Macau, plus delisting from the Hong Kong Stock Exchange should the Macau court officially declare the company bankrupt.
After applying to the court this week for voluntary liquidation of its wholly-owned subsidiary New Concordia Hotel Limited, the sole beneficial owner of THE 13 Hotel, South Shore issued a supplementary announcement overnight in which it confirmed the court would first appoint a liquidator and one or more creditors to assist the liquidator, to provide an opportunity for the company to avoid liquidation via approved liquidation preventative measures.
These, it said, could include a debt restructuring plan or a business continuation agreement by the creditors.
However, if no measures are approved, New Concordia will be declared bankrupt and the liquidator will take possession of the subsidiary’s assets and books.
In such a scenario, South Shore “would lose control over the subsidiary’s property in Macau, including the hotel in Macau. As the subsidiary constitutes a substantial part of the business of the Company, the loss of control over the subsidiary’s property will result in insufficient operations of the Company as required under Rule 13.24 of the Listing Rules.
“There is a possibility that the Stock Exchange may proceed with the delisting of the Company, unless the Company is able to implement appropriate measures satisfactory to the Stock Exchange to preserve the Company’s listing status.”
South Shore has faced increasing pressure from its lenders to repay mounting debts in recent months, including a statutory demand issued by one lender demanding payment of HK$3.28 billion (US$423 million) in outstanding loans and interest or face a winding up petition against the company.
Another lender terminated the ongoing renewal of a bridging loan last month on money owed of HK$593 million (US$76.5 million), while also exercising its rights under the original loan agreement to assume ownership of the subsidiary that holds South Shore’s engineering arm, Paul Y. Engineering Group Limited.
The brainchild of long-departed Chairman Stephen Hung, THE 13 had been envisioned as an uber-luxury hotel with space for 66 VIP gaming tables aimed at capitalizing on Macau’s booming VIP segment of the early 2010s. Instead, a series of funding and construction delays saw the property open in September 2018 with no gaming and with a number of rooms unfinished – all at a cost of US$1.6 billion.
New Concordia itself has raised some funds in recent times via the sale of most of its fleet of 30 Rolls-Royce Phantoms, purchased in 2016 at a cost of US$20 million. Twenty-four of those Phantoms were sold for a combined HK$24 million in 2019 to repay debts, while another was sold earlier this year for HK$3.5 million (US$450,000).