Hong Kong-based investment holding company Summit Ascent Holdings Limited (102:Hong Kong) will reportedly begin construction on the US$200 million phase two of Tigre de Cristal located in Russia’s Primorye Integrated Entertainment Zone (IEZ) near Vladivostok by Q4 this year.
However, the Asian casino operator has decided it will not further increase the scale of the Russian integrated resort’s planned Phase II expansion, it will instead look to diversify its assets and revenue streams, according to the source.
Announced on Monday, the casino investor chaired by Macau junket promoter Alvin Chau, reported a HK$47 million (US$6.1 million) first-half loss, compared to HK$42.8-million in profit the first half of 2019. Total revenue for the group from hotel and gaming operations combined, for the six months to June 30, 2020, was HK$96 million (US$12.4 million), a decline of 62. 7 percent. Travel restrictions linked to the Covid-19 pandemic were reportedly blamed for the loss.
On March 28, 2020, Summit suspended all gaming operations at its Russian resort after the government announced plans to block its borders in order to control the spread of COVID-19. Tigre de Cristal was granted permission by the Governor of Primorsky Krai to reopen the Russian casino from July 16, 2020.
Summit Ascent reportedly said the total projected cost of the phase is now US$200 million, US$120 million of which it would input based on its 60 percent interest in Oriental Regent Limited, the operator of Tiger de Cristal.
The earnings report from Summit Ascent Holdings Limited reportedly read…
“Due to the recent redesigns with the input of Suncity, the Group has been reviewing and finalizing the conceptual designs of the Tigre de Cristal Phase II development on Lot 10, and planning to commence the construction works in the fourth quarter of 2020, targeting an opening in 2022.
“This new integrated resort is expected to double the Group’s VIP and mass gaming tables, slots, and have at least twice the lodging capacity of the existing property, and will include four restaurants and bars, additional retail offerings, and an indoor beach club and spa. The Phase II development of Tigre de Cristal will place the Group in a better position to attract and retain customers, especially when other casino operators in the IEZ Primorye open for business in the near future.”
Summit Ascent, which the Alvin Chau-chaired Suncity Group Holdings Ltd now has a controlling 24.74 percent stake courtesy of a $91.5 million deal completed in April this year, revealed that instead of further expanding Tigre de Cristal it will instead opt for a previously announced investment into Suncity’s Philippines-listed entity, Suntrust Home Developers Incorporated, to develop a US$800 million hotel and casino at the metropolitan Manila-located Westside City Resorts World.
In May, the Suncity Group Holdings subsidiary inked an operating and management agreement with Westside City Resorts World Inc for the operation and management of the main hotel and casino at Westside City Resorts World, from May 4, 2020, through July 11, 2033.
According to the source, the Hong Kong-listed company will subscribe to HK$847 million (US$109.3 million) convertible bonds in Suntrust, the cost of HK$1.24 billion (US$160 million) to be financed via a rights issue that is to see Suncity’s stake in Summit Ascent rise to 69.78 percent.
The company said…
“Whilst the Directors remain cautiously optimistic about the long-term prospects of Tigre de Cristal in the Russian Federation, they are of the view that it is in the best interests of the Company to diversify its assets and revenue streams in order to reduce the Group’s reliance on a single revenue source and location.
“From a geographic diversity point of view, the Company has been exploring other business opportunities in order to expand the existing business of the Group and to explore new markets with significant growth potential. The investment in SunTrust marked the first step towards establishing the Group’s footprint in the casino and entertainment market of the Philippines and allowing the Group to tap into this growing market, as well as providing synergies to the overall tourism related business in partnering with SunTrust and Suncity.
“The Directors believe that investing part of the net proceeds from the Rights Issue for the Subscription to achieve the diversification is more compelling than expanding the current scale of the Phase II development of Tigre de Cristal.”
Summit said in its Monday earnings report, the group recorded an Adjusted Property EBITDA loss of HK$22.1 million (US$2.9 million) in 1H20, however, it retains a strong financial position with cash on hand of HK$816.7 million (US$105.4 million), sans any bank borrowings, as of June 30 this year.