Asian gaming investor Century Entertainment International Holdings Ltd said overnight it has entered into a Subscription Agreement under which its Chairman and CEO, Ng Man Sun, under which the company will issue him with Convertible Bonds in the principal amount of HK$32 million (US$4.1 million).
Under the terms of the agreement, the HK$32 million will be set off against part of a previous HK$58.7 million (US$7.5 million) loan provided by Ng to the company in a “no money changes hands” transaction.
The Convertible Bonds are interest free with an initial conversion price of HK$0.256, and are due to mature in three years from the date of being issued.
Ng currently holds a 27.97% stake in Century Entertainment. Upon full conversion of the bonds, which would see new shares issued representing 97.47% of the currently existing issued share capital of the company, Ng’s stake would increase by 49.36% to reach 63.52% of the newly issued share capital.
However, Century Entertainment said Ng has agreed not to exercise his conversion rights if it would take his holding above 30% and create a scenario under which he would be obliged to make a general offer under the Takeovers Code or whereby the company would be unable to meet its public float requirements under the Hong Kong Stock Exchange’s Listing Rules.
In outlining the reasons behind the Subscription Agreement, Century Entertainment said, “The Group recorded no revenue and a loss of approximately HK$62.5 million (US$8.0 million) for the year ended 31 March 2023. Given the loss-making condition, the financial position the Group has been adversely affected and the Group recorded net liabilities of approximately HK$67.5 million (US$8.6 million) as at 31 March 2023.
“However, given the prevailing market prices and trading volume of the Shares and the net liabilities position of the Group, it may not be practicable for the Company to carry on a fund raising exercise for substantial amount by way of issue of Shares to independent third party(ies) or to existing Shareholders on a pro rata basis without considerable discount to the market prices of the Shares.
“Accordingly, the Company has decided to negotiate with the Subscriber on the proposed settlement plan of the Indebted Amount. As a result of the negotiations, the Company and the Subscriber agreed to settle part of the Indebted Amount through the Subscription.”
Century Entertainment recently confirmed it is still yet to launch its new table games business in Cambodia, almost four years after first announcing plans to relocate operations from its former home in Sihanoukville to a casino in the Dara Sakor investment zone on the Cambodian coastline, some 150 kilometers south of the border with Thailand.