Suncity Group Holding’s ownership now appears to be in the hands of creditors to one of former CEO Alvin Chau’s companies after a debt was not repaid.
The company said that it had been informed that the borrower had failed to pay back HK$313.6 million that was secured by Chau’s 74.8 percent stake in Suncity and other convertible bonds.
The lenders are enforcing the securities and may now sell them, transfer them or dispose of them with no further notice, it said, adding it has no further information as to how the agent for the lenders will proceed. It warned that enforcement may lead to a change in control at the company.
Suncity said last week that Chau’s Star Soul Investments had taken out the loan with a syndicate of lenders through an agent named as Wooco Secretarial Services in July last year. Wooco claims that the loan is technically in default due to Chau’s arrest. It gave Star Soul five business days from Dec. 8th for repayment.
The arrest of Chau in late November on charges of organizing illegal gambling and money laundering has triggered a more than 55 percent plunge in the group’s share price to a record low on concern about the fallout on the business.
Last year, Chau dipped into his own pockets to lend the firm up to HK$6 billion (US$780 million) and exchanged loans into perpetual securities to help the group’s cash flow during the Covid crisis.
While Suncity also said that a company owned by Chau accounted for about 17.4 percent of group revenue during the first half of this year. It has now closed down its travel and related services business following the loss os support from Chau’s company.
Suncity operates the Tigre de Cristal resort in Russia’s Primorye Gaming Zone, which currently accounts for about three quarters of group revenue. It also has a minority interest in the company that owns the Hoiana in Vietnam. The resort opened last year although its ramp up has been hit by the country’s border closures due to Covid.