Macau electronic gaming machine service provider Success Dragon has entered into a Placing Agreement that will see it place almost 415 million shares representing 20% of the issued share capital of the company, with a view to raising desperately needed funds.
In a filing to the Hong Kong Stock Exchange on Friday, Success Dragon said that its cash and cash equivalent reserves are down to just HK$1.2 million, “all of which were intended to be used for the operations of its existing businesses.” The placing of shares will raise up to HK$97.5 million of which around HK$48 million will be used for business development and HK$21.4 million to repay a director’s loan and other loans, with the balance to be utilized as the general working capital of the group.
The net price per placing share is approximately HK$0.24 with the company looking for no fewer than six placees.
Success Dragon saw its revenue decline 25.7% in the year ended 31 March 2018, including an 18.2% decline in its “Outsourced Business Process Management” segment for electronic gaming machines to HK$107 million. The segment comprised more than 95% of all revenue.
Overall losses fell from HK$156.2 million last year to HK$131.6 million in FY18 around due to a decrease in operating and administrative expenses, however the “Outsourced Business Process Management” segment saw its loss grow from HK$7 million to HK$11.6 million, due mainly to “the heavy operating cost and worse performance of one of the operation outlets located at the Landmark Macau.”
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