South Shore Holdings Ltd says it has applied to its bank for a “standstill” to prevent enforcement of security over THE 13 Hotel in Macau and liquidation of the company after the bank issued a demand for immediate payment of HK$2.48 billion owing under its facility agreement.
The demand, which covers the entire principal amount plus interest, comes after the company was unable to pay HK$470 million due on 31 March 2020, which it had previously anticipated would be sourced from the disposal of a 50% interest in Uni-Dragon Ltd, the subsidiary that beneficially owns THE 13. That disposal has yet to be completed.
On Monday, South Shore said neither its “borrowing entity nor the company can repay at this time” and that it has instead applied to the bank for a standstill, “in essence seeking assurances from the bank that it will not take imminent steps either to enforce its security over THE 13 Hotel or to liquidate the Company, and envisages working closely with the bank to achieve an orderly divestment of the Company’s interests in THE 13 Hotel.”
South Shore also revealed it has reached agreement with the prospective buyers of the 50% stake in THE 13 to extend the long-stop date from 14 April 2020 to 14 June 2020 in order to ensure fulfilment of certain conditions under the Sale and Purchase Agreements. The company cited the “severe adverse effect of the COVID-19 pandemic on the state of the market, in Macau and generally,” as a reason for recent delays.
It was October last year when South Shore first revealed it was planning to sell up to a 50% stake in its embattled THE 13 project for HK$750 million and November when it released details of the agreement, involving a trio of Hong Kong companies.
Shortly afterwards, South Shore reported a loss of HK$506.7 million for the six months to 30 September 2019, 15% higher than the prior year period due to increased costs at THE 13 Hotel.
Located south of the Cotai Strip, THE 13 Hotel opened on 31 August 2018 following a series of delays due to funding problems. However, a number of rooms remain unfinished and the company has made no attempt to apply for a gaming license despite having space for 66 gaming tables under a potential “service agreement” arrangement it previously reached with Macau concessionaire Melco Resorts and Entertainment.
(Photo: THE 13 Hotel)
