All in to get out of the red

The 13 Holdings is proposing three avenues to raise ‘urgent’ funds to open its luxury hotel in Cotai by the end of March 2018, with no gaming facilities confirmed yet

The 13 Holdings Limited has announced it is planning to open its hotel ‘on or before’ March 31, 2018, if it manages to raise nearly HK$2 billion (US$256.32 million/MOP2.06 billion) through a combination of funds, debt, and loans, according to a filing of the company with the Hong Kong Stock Exchange last Friday.
The company stated that the inclusion of gaming operations in the hotel, which it plans to do ‘as soon as practicable,’ is subject to the progress of the licensed operator submitting an application and obtaining approval for the operation after the license for operating the hotel is granted.
Regardless of the status of gaming operations in the property, the company noted it ‘will not affect’ the opening and operation of The 13.
Confirming previous filings, the company stated on Friday that postponements regarding the completion of the hotel – originally slated to open by the end of 2016 – were mainly due to delays in obtaining various licences and permits, in addition to more costs for hotel decorations, acquisition of furniture, fixtures, and equipment as well as operating supplies and equipment.
The reasons for the delays were also reported as justifying the requirement of ‘further funding’ for completion of the property.
Currently, the Hong Kong-listed company states it is exploring three avenues to cope with the costs required to enable the opening of The 13 on or before March 31, after it already obtained a HK$300 million loan in December 2016 as ‘a temporary measure.’
In total, The 13 is seeking to raise nearly HK$1.74 billion through a rights issue offering and the placing of loan shares, having secured a HK$250 million bridge loan to keep up with the new schedule for the opening.
According to the filing, the company noted it expects the proceeds from the rights issue ‘will be sufficient for the completion of The 13,’ while the placing ‘will enable the group to service its existing debt’.
As for the bridge loan – which is to be repaid from the proceeds of the rights offering – the company claimed it ‘will provide temporary financial relief to the group, enabling [it] to resume the remaining fitting-out works of The 13 Hotel before the completion of the rights issue.’

Rolling the debt
The 13 is proposing to raise gross proceeds amounting to some HK$1.01 billion through a rights issue offering fully underwritten by Get Nice Securities Ltd.
The company estimates net proceeds from the rights issue will reach some HK$973 million.
Within the rights issue framework, the company is also proposing shareholders approve the capital reorganization, mainly through a 1 for 10 consolidation of shares and a reduction of the issued capital of the company.
In another deal with Opus Capital Limited, the company agreed to place loan notes of an aggregate principal amount of HK$740 million to placee(s) who are not and whose ultimate beneficial owner(s) are not connected persons of the company.
The company intends to use the net proceeds from the placing, estimated at HK$717 million, mainly for debt servicing.
As for the HK$250 million bridge loan, The 13 noted it entered into an agreement bearing interest at an annual rate of 18 per cent with Get Nice Finance Company Limited, a subsidiary of Get Nice Securities.
While stating it ‘is in urgent need of financing,’ the company claims the loan ‘shall provide temporarily financial relief,’ while ‘enabling the group to resume the remaining fitting-out works of The 13 Hotel before the completion of the Rights Issue.’

Gaming room
In the filing, The 13 announced that it had previously entered into a memorandum of understanding (MoU) with an affiliate of one of the holders of ‘a gaming concession or sub-concession’ in Macau in relation to the management and operation of a casino proposed to be opened in the property.
The company noted in this regard that ‘no formal agreement has been entered into in respect of the arrangements under the MOU’ as at the date of the announcement, although it claimed further that ‘it did not foresee any difficulties for obtaining approval from the Macau Government on the arrangements as contemplated under the MoU.’
The Gaming Inspection and Co-ordination Bureau (DICJ) confirmed to Business Daily that it has ‘not yet received any one of the gaming concessionaires requesting to open a new casino in The 13 Hotel location.’
As at the date of the announcement, The 13 confirmed that it has not received any negative feedback from the licensed operator in respect of the MoU.
The Macau Government Tourism Office (MGTO), in response to Business Daily’s enquiries, said that as of today it had 'yet to receive [The 13's] application for inspection'.