0

Junket operator Suncity Group sells two subsidiaries for less than $1

Posted on: May 11, 2022, 8:24 a.m.

Last update: May 11, 2022, 8:24 a.m.

Junket operator Suncity Group is still reeling from the arrest of its former boss, Alvin Chau, and COVID-19 concerns in Macau. To stop the financial hemorrhage, she lets go of two business units – for less than a dollar.

Suncity Group
Suncity Group, once the biggest junket operator, continues to look for ways to stay afloat. He will sell a group of assets for less than $1 in the hope that he can survive. (Picture: Macau News)

The Suncity group begins to fulfill its mission of reducing its footprint in order to alleviate its financial overload. He announced earlier this month, after announcing losses of $60 million last year, that he would cut some businesses in order to regain financial ground. It comes after he shut down his travel and other businesses to ease the pressure.

In an announcement on the Hong Kong Stock Exchange yesterday, Suncity said it would sell two groups of wholly-owned subsidiaries. Even though the selling price will not put money in his pocket, it will produce profits in the long run. The junket operator sells the assets for a total of HK$1.00 (US$0.13).

Losses Necessary to Realize Gains

Although the sale price barely appears as an anomaly on the radar, Suncity is looking at the big picture. By releasing companies from his portfolio, he will get rid of the unwanted debt that is weighing him down. The company will no longer be liable for debts and loans incurred by the entities, which Suncity says equates to savings of approximately HK$127.8 million (US$16.28 million).

According to the filing with the exchange, only an asset sale agreement is in place. The deal is still subject to normal regulatory oversight to succeed. Only then will Suncity receive the benefits.

Great Promise Developments Ltd, a company incorporated in the British Virgin Islands, is the buyer, according to Suncity. This entity is owned by Zhong Jianhua, a businessman with apparent ties to one of the loan companies Suncity has dealings with. Zhong would own 50% of this lender.

The group of companies that Suncity will propose includes Shenzhen Sky Alliance, which has two outstanding loans. One has a principal amount of HK$366.92 million (US$46.74 million) and is secured by loan claims worth HK$613.68 million (US$78.18 million). US dollars). However, Suncity says collecting these receivables in a timely manner to pay the loans is an insurmountable task.

The second loan, to a different lender, has a principal amount of HK$220.15 million ($28.04 million). In both cases, the interest rate is only 1.5%. However, both were due late last month, with Suncity unable to keep up with payments.

Suncity’s footprint shrinks

There are a total of seven entities that will transfer ownership through the agreement. Among them are holding companies, as well as companies that manage and operate shopping malls and other commercial properties in China, Japan and other Asian countries.

The holding companies, designated disposal groups A and B, are not in good financial health. Disposal Group A had an unaudited consolidated net liability of HK$464.8 million (US$59.21 million) at the end of last year. Over the past two years, it has recorded consistent pre- and after-tax losses on its earnings.

Elimination group B is in a similar situation. This group had unaudited consolidated net liabilities of HK$76.5 million (US$9.7 million) at the end of 2021. Its pre- and post-tax revenue losses were not as drastic as those of the group of sale A, but still contributed to the performance of Suncity. negative financial situation.