THE 13 hotel is continuing to be a drag on South Shore Holdings, threatening to bring down the entire company. The company’s been forced to sought a “standstill” with its bank to prevent liquidation of the company.
On April 6, the company informed the Hong Kong Exchanges about its new tense hotel situation. As of its facility contract, it has to make an immediate payment of HK$2.48 billion ($320 million). The sum includes the full sum of principal and interest, which matches the HK$470 million ($60.62 million) due on March 31. It anticipated that from its 50 percent stake in Uni-Dragon, it would get that number, but that disposal has yet to come.
The company accepted that at this time, neither the “borrowing entity nor the company can repay at this time,” resulting in their need to apply for the standstill. It is hoping the transfer would mean, “in essence seeking assurances from the bank that it will not take imminent steps either to enforce its security over THE 13 Hotel or to liquidate the Company, and envisages working closely with the bank to achieve an orderly divestment of the Company’s interests in THE 13 Hotel.”
THE 13 has long been in deep trouble, with reports dating back as far as August, 2019 that the organisation will be seeking to sell its interest in the resort. The business nevertheless cited the “severe adverse effect of the COVID-19 pandemic on the state of the market, in Macau and generally,” as part of why they are having difficulty making payments now.
The closing of all resorts in Macau in February, and the ongoing impact of COVID-19 on the region, will certainly affect the capacity of the casino to generate revenue. But just as troubling would be that the hotel hasn’t yet finished building, so losses have been piling on for months. Even if Macau returns to normal miraculously soon, which does not seem likely, the resort will still face significant problems, and it would be difficult for South Shore Holdings to make payments on those loans.