South Shore Holdings looks set to lose its engineering arm, Paul Y. Engineering Group Limited, after one of its lenders revealed it has executed its rights to sell all shares in a subsidiary of The 13 Hotel (BVI) Limited, operator of Macau’s THE 13 Hotel.
Details of the lender’s actions, which also include a demand for full repayment of outstanding loans totalling HK$593 million (US$76.4 million), were published Sunday night after South Shore had requested a trading halt late last week.
In an inside information filing ahead of the resumption of trading, South Shore revealed it had received a letter from the lender, Wise Park Business Limited, on 13 May 2021 terminating the ongoing renewal of a bridging loan and demanding full payment of the HK$593 million in loans and interest owing by the following day.
With South Shore unable to pay, Wise Park sent another letter on 18 May confirming it had exercised its rights under the original loan agreement to assume ownership of The 13 (BVI) Limited, a subsidiary of The 13 Hotel (BVI) Limited, and reached agreement with a third party to sell the shares for HK$150 million (US$19.3 million). Those proceeds will be applied to the money owing, however Wise Park is also demanding full repayment of the remaining balance or it will launch legal proceedings.
The 13 (BVI) Limited appears to be linked with Paul Y. Engineering Group Limited rather than The 13 Hotel, with South Shore stating “it is highly probable that Paul Y. Engineering Group Limited will no longer be a subsidiary of the Company and the results of Paul Y. Engineering Group Limited will not be consolidated into the Group’s consolidated financial statements,” as a result of the transaction.
The loan in question was originally provided by a company called Evo PE Opportunities in December 2016 to help fund the development and pre-opening costs of THE 13 Hotel. All rights to the loan were assigned to Wise Park in 2018.
South Shore Holdings last week issued a profit warning ahead of an expected loss of HK$950 million (US$122 million) for the year ended 31 March 2021, adding to a similar loss of HK$1.02 billion (US$131 million) recorded 12 months earlier.
(Photo: THE 13 Hotel)