CST Group Listed In Hong Kong To Purchase 10pct In The 13 Hotel

A Hong Kong-listed “e-logistics” and mining company named CST Group Ltd said it had an agreement on Tuesday to acquire a 10 percent equity interest in an organisation operating The 13 Hotel in Macau–and a shareholder’s loan due from it. The exercise includes HKD150 million (US$ 19.1 million) in cash consideration.

The property is located on the border between Coloane and Macau’s Cotai Casino District. The location had a partial opening on August 31, 2018, offering 200 duplex suites and a variety of restaurants. South Shore Holdings Ltd, its developer, aspires to have a casino on the property.

Earlier Tuesday, in one of its own disclosures to the Hong Kong Stock Exchange, South Shore said that it had an arrangement that could lead to the disposal of a 40 percent interest in a company held by The 13, for a total consideration of “up to HKD750 million.”

The filing in the exercise did not identify the branch of the corporation or the prospective shareholders. The filing indicated that in the subsidiary operated by The 13 Hotel, South Shore expected to reach another deal on the disposal of a “further 10 percent.” The Tuesday report of the CST Group did not clarify precisely where it sits in those arrangements.

Since 9 am on Tuesday, South Shore has been suspended from trading in Hong Kong.

In CST Group’s Tuesday filing, the firm said it was purchasing a 10 percent stake in–and investor loan due from–an entity called Uni-Dragon Ltd, a British Virgin Islands-incorporated group which indirectly owns the entire stake in New Concordia Hotel Ltd–The 13 Hotel’s sole beneficial owner.

CST Group also said the acquisition agreement could help the company “invest in the Macau property market” and diversify its portfolio of investments.

In previous filings this year, South Shore said it has not entered into any formal agreement with any Macau gaming dealers or sub-concessionaires about gaming operations at The 13 Hotel.

According to the company’s annual report submitted in late August, South Shore announced a net loss of more than HKD5.84 billion for its fiscal year ended March 31, 2019. As of that fiscal year, the company had reported losses of more than HKD7 billion.

The lack of gaming rights was a factor in a “significant reduction” in the occupancy of hotels and room rates compared to the expected ones, with similar impact on revenue compared to what was previously mentioned in the business plans of the company, South Shore mentioned in its annual report.