The Suncity leadership will take extreme steps to “concentrate on endurance” – Finance – iGB
The management of the struggling resort operator Suncity will implement a “strict cash preservation” and “unyielding cost reduction” plan to ensure the continued operation of the enterprise.
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Suncity’s board of directors will take extreme steps to “concentrate on endurance”
The gambling intermediary experienced turmoil at the end of 2021 and the beginning of 2022 after the group’s chairman, Alvin Chau, was apprehended in November. Following the event, Suncity ceased its gambling brokerage business.
Alvin Chau has stepped down from all positions at Suncity. He was accused of running illegal online gambling websites.
After Chau’s apprehension, Suncity also became the focus of loan default claims, as an anonymous lender alleged that Chau had broken a HK$313.6 million debt. As a result, Suncity warned that the business could be taken over by creditors.
In March, the company claimed that Goldin Enterprises failed to repay a $30 million loan to Suncity. Goldin Enterprises is a joint venture between Suncity’s subsidiary Starfleet and Alpha Era, an investment trust related to the Hoiana resort in Vietnam.
A week later, Suncity warned that the group had “significant doubt about its ability to continue as a going concern” as it reported a net loss of HK$646.2 million (£62.8 million/€74 million/$82.6 million) for 2021.
The firm has encountered financial setbacks over the past two years due to travel limitations in its primary markets and the subsequent shutdown of its exclusive guest areas.
The firm is currently making every effort to remain operational.
“The governing body has directed the company to consolidate all assets and prioritize survival,” stated the board of Melco Resorts. “Rigorous cash preservation is the group’s utmost priority. The group is implementing the most stringent cost-reduction plan ever. Non-essential ventures have been and will continue to be divested, such as the disposal of mainland China property and aircraft in 2021.
“Management has also transformed the City of Dreams into a temporary isolation facility; actively reducing operational expenses while striving to minimize disruption to the guest experience at City of Dreams as a top-tier integrated resort.
“In Japan, the group may consider selling hotel development land in Niseko and Miyakojima.”
The company’s Summit Ascent subsidiary manages the “Tiger Crystal” resort in Vladivostok, Russia. The governing body stated that the business was performing well. However, the company deferred plans to expand the resort following Russia’s incursion into Ukraine in February.
“In Russia, the local mass market and slot machine business have enabled Tiger Crystal to be self-sustaining and generate positive earnings before interest, taxes, depreciation, and amortization,” the board stated.
The groups’ continued production of earnings before interest, taxes, depreciation, and amortization (EBITDA), cash conservation, and self-sufficiency will keep it afloat and functioning.
The board also stated that, as the Macau junket model is now in doubt, it will attempt to reposition itself as a comprehensive resort operator.
“With Macau effectively now out of the VIP brokerage business, there is a relatively limited supply of high-end gaming facilities in Asia to fulfill this expanding need,” it stated. “As the group continues its metamorphosis into a pan-Asian integrated resort operator, it will target all traditional gaming segments, including VIP, premium mass, mass, slots, and non-gaming.
“Moreover, the board will concentrate resources on areas with the most robust returns and lowest risk.”
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