Suncity has issued a “change of control” alert, citing a loan default by Alvin Chau.
Chau’s Star Soul Investment Company reportedly failed to make a HK$300 million (GBP 29 million/EUR 34 million/USD 38.5 million) payment, potentially allowing creditors to take control of his stake in VIP operator Suncity.
Suncity’s subsidiary, Summit Ascent, which operates the Tiger Crystal Resort in Vladivostok, Russia, has also issued a similar notification.
Chau was one of 11 individuals apprehended in Macau on November 27th for alleged involvement in an illegal gambling operation spanning multiple borders.
Following his apprehension, Chau declared his resignation as chairman of Suncity and Summit Ascent, but maintained his position as the controlling shareholder of the Suncity Group.
The group is accused of establishing an illicit live betting platform in the Philippines, attracting patrons from mainland China through Macau’s VIP rooms. The group is said to have used local bank accounts to transfer operating revenue out of the country.
Subsequent to these occurrences, Wu Ke Secretarial Services Company provided a HK$300 million (GBP 29.1 million/EUR 34.1 million/USD 38.5 million) loan to Chau’s Star Soul Investment Company on July 30th and issued a “demand letter” to Star Soul.
The letter demanded full repayment of the loan, along with interest, totaling HK$313.6 million, citing the arrest as a possible default.
The correspondence arrived at Suncity on the 8th of December.
Suncity declared that Star Soul is not affiliated with the Suncity Group, however, Alvin Chau was recorded as a guarantor for the loan.
Consequently, the 74.9% holding in Suncity owned by Fame Select Limited, jointly possessed by Alvin Chau and Zheng Tingkang, might be sold or otherwise transferred.
Suncity highlighted that additional assets that could be at risk include corporate bonds held by Fame Select.
“As of the date of this notice, the Company has not received any information from Wooco regarding their approach to handling the aforementioned securities when executing them.” Suncity stated. “Wooco’s execution of the aforementioned securities could lead to a change in control of the Company.”
“If the Borrower fails to fulfill the aforementioned obligations, appropriate action will be taken against the Borrower without further notification, including (but not limited to) legal proceedings against the Borrower to recover the aforementioned amounts, along with all associated costs, expenses, and fees.” Suncity emphasized.
Following the revelation of the default, Suncity halted trading of its shares on the Hong Kong Stock Exchange yesterday (December 9), but business will resume trading next Monday (December 13) as these details are revealed. At the time of the suspension, Suncity shares were valued at HK$0.14, half the price they traded at prior to Alvin Chau’s apprehension.
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