Bernstein: Hotel “not viable” without casino
Shares of 13 Holdings Ltd. dropped to their lowest level in almost 21 years after the Hong Kong-based company tried to raise millions to pay for the $1.6 billion 13 Hotel in Macau. Inside Asian Gaming called the ploy “a last-ditch ‘Hail Mary’ fundraising attempt.”
The casino targeted at the super-rich was the brainchild of billionaire Stephen Hung. But five years after Hung announced the plan, the property remains unopened. According to Bloomberg News, the hotel developer now hopes to raise HK$1 billion (US$128 million) in a rights offering and up to HK$740 million more through debt to fund the resort. But 13’s market value toppled by almost 49 percent to $55 million in Hong Kong trading last week. The share price of HK$0.465 was the lowest price since April 1996. The stock was halted October 20.
Billed by its developer as “the world’s most luxurious casino resort” in Macau, the 13 site is located on the Coloane end of the Cotai Strip. Originally the hotel was to have opened in 2016; in August, it missed an opening deadline tied to a US$384 million loan. While 13 Holdings Ltd. still maintains it will open the hotel this year, a note from Union Gaming Securities Asia Ltd. earlier this year suggested financial hurdles may delay the opening into early 2018. 13 Holdings has yet to be granted a gaming license.
Analysts from brokerage firm Sanford C. Bernstein said in a note this month that a standalone hotel property like the 13 would not be “economically viable” if it does not include a casino on its premises.
According to a stock exchange filing, earlier this month Get Nice Finance agreed to provide 13 Holdings a one-year loan of HK$250 million. The loan, with an annual interest rate of 18 percent, was earmarked for non-construction costs and general working capital. Most recently, reported GGRAsia, 13 Holdings said it would open the Macau property “on or before” March 31, 2018.
“The company expects these new funds will allow it to target completion and opening of its hotel on Macau’s Cotai strip by the end of March 2018, subject to confirmation from key contractors, suppliers, and vendors once the company’s financial position allows it to resume works,” said a statement from the company.
