Suncity Group Holdings Ltd is to receive a cash payment of circa CNY155.3 million (nearly US$24.03 million) for disposal of a loss-making mainland China property development and leasing firm with interests in Guangdong province.
A Sunday filing by Hong Kong-listed Suncity Group Holdings – a firm led by Alvin Chau Cheok Wa, who also leads privately-held Macau casino junket brand Suncity Group – said the deal agreed in principle that day, was for the entire issued share capital of Access Achievement Ltd, a British Virgin Islands firm wholly-owned by the listco.
The disposal group recorded unaudited consolidated net liabilities of approximately CNY845.57 million as of December 31.
Suncity Group Holdings said the disposal of Access Achievement would see what it termed net proceeds to the group of approximately CNY655.43 million.
This was on the basis that the disposal group would implement a debt restructuring, under which it and the “remaining group” would undergo a series of “debt assignments, novations, set off[s] and/or waivers,” covering obligations including two loans from China Citic Bank amounting to CNY550 million.
A loan from Shenzhen Sky Alliance Property Co Ltd – a mainland firm wholly owned by Suncity Group Holdings – amounting to CNY501.75 million, and to be used toward repayment of China Citic Bank loans by the disposal group, will be repaid to Suncity Group Holdings in stages, until June 3023.
Suncity Group Holdings stated: “The company intends to apply the net proceeds from the disposal, of approximately CNY655.43 million… subject to the actual completion date,” in terms of “approximately CNY501.75 million… for the repayment of other borrowings; and approximately CNY153.68 million.. for the general working capital of the group.”
Suncity Group Holdings also has an investment in Hong Kong-listed Summit Ascent Holdings Ltd, the promoter of the Tigre de Cristal casino resort in Vladivostok, Russia.
The purchaser of the Access Achievement share sales is Wit Dragon Ltd, a British Virgin Islands investment firm said to have owners that are independent third parties.
The disposal group recorded net losses of approximately CNY363.45 million and CNY184.85 million for the years ended December 31, 2020 and 2019, respectively.
Since talks in 2017 with a potential buyer for the disposal group, Suncity Group Holdings had “received no [fresh expressions of] interest or offers for the acquisition of the disposal group”.
The filing added: “Given the condition of the investment properties, the decreasing occupancy rate and increasing spending through online retail,” the Suncity listco “does not expect that there will be offers at a higher offer price than the consideration” that is currently tabled.
Nonetheless, following the share sale transaction, a wholly-owned unit of the Suncity listco – namely the metioned Shenzhen Sky Alliance Property Co Ltd – would lease back certain premises in Shenzhen, Guangdong, from a company linked to the share sale purchaser.
Such lease would be for 72 months, at CNY59 per square metre.
As the property concerned covers 2,449 sq metres – assuming rental is charged monthly – that exercise would cost Suncity Group Holdings’ side circa CNY10.40 million.