Due to concerns about a possible default on a loan, both Hong Kong’s Suncity Group Holdings and Summit Ascent Holdings, a majority-owned subsidiary, were placed under a trading halt. The suspension came as the two companies announced the pending release of information that could hinder its future.
Suncity Struggles to Find Solid Ground
Trading in shares of both companies was stopped Thursday morning. Each company issued identical statements shortly after indicating that there had been “an announcement in relation to a possible loan default by an associate of the ultimate controlling shareholder of the company and possible enforcement of securities charged.”
Alvin Chau is Suncity’s controlling shareholder. He was taken into custody by Macau’s Judiciary Police last month and sent to prison for his alleged involvement in illegal gambling, criminal association, and money laundering. Last week, Chau was relinquished his position as Chairman of both Suncity Group and Summit Ascent.
The trading halt is the third since Chau was arrested. Suncity had warned that the possible loss of financial support Chau provided to the group through shareholder loans and subscriptions to securities could prove to be detrimental. This support, Suncity said, was crucial in fulfilling the company’s ongoing development commitments to Russia, Vietnam, and the Philippines.
Suncity’s International Plans In Doubt
Suncity is an investor and majority shareholder in Vietnam’s integrated resort Hoiana. It is also a major shareholder in the Philippines entity currently building a $1-billion hotel and casino in Manila’s Entertainment City precinct. Summit Ascent is also the owner of Russia’s Tigre de Cristal located in Vladivostok.
All Macau-based VIP gaming venues of Suncity Group ceased operations on December 1. After previously controlling around 40% of the market, this loss put a huge dent in the company’s finances. Over the past two years, Suncity has also relied heavily on investments from Chau, which are no longer going to be available.
According to reports, Macau casino operators, such as Wynn Resorts, have decided to stop collaborating with junket companies in the city. However, none of these casino firms has publicly stated their intention to do so.
SJM Holdings Ltd. stated in Thursday comments that there were ongoing “contractual relations” between the brand and junkets. However, it said that it would revisit the situation when it was appropriate to renew such agreements.
Macau Gaming Employment Not Impacted
According to the Macau government, the loss of jobs in VIP rooms promoted by junkets would not affect the work of those employees as they are contractually tied to the casino operators.
The Gaming Inspection and Coordination Bureau and Labour Affairs Bureau jointly stated Wednesday that the existing laws and regulations protect the rights of employees working in VIP rooms promoted and maintained by junkets. However, the statement stated that workers in non-gaming jobs directly employed by junket operators should “safeguard their labor rights.”