Hong Kong’s Securities and Futures Commission (SFC) says it has “serious concerns about the conduct” of management of LET Group Holdings and its subsidiary Summit Ascent Holdings in relation to the planned sale of the entity that controls its Russian integrated resort, Tigre de Cristal.
The SFC issued a statement this week in which it confirmed it has directed the Hong Kong Stock Exchange to suspend dealings in the shares of both LET Group and Summit Ascent due to concerns regarding the “very substantial disposal”, which it believes was conducted without the necessary approval of shareholders.
It also noted that, after completion of the disposal, both companies may not have a business with a sufficient level of operations and assets of sufficient value to support their operations to warrant a continued listing status, given that Tigre de Cristal has been their primary source of income pending the ongoing development of an integrated resort in Manila.
As reported by Inside Asian Gaming, Taiwanese firm Firich Investment Ltd recently revealed it will enter into a transaction to sell 100% of its shares in G1 Entertainment LLC – the operating entity of Tigre de Cristal – to a local Russian company identified as Dalnevostochniy Aktiv LLC for a total consideration of US$116 million.
Firich currently owns a 20% stake in Oriental Regent while Summit Ascent holds a controlling 77.5% stake. LET Group, formerly known as Suncity Group, owns 69.66% of Summit Ascent.
It is understood the transaction will also see LET Group and Summit Ascent sell their stake, although a formal announcement has not been forthcoming since they entered a trading halt on 11 January.
Since then, directors of the two companies staged a mass resignation, leaving Executive Director and Chairman Andrew Lo Kai Bong as the only remaining board member of each. Lo assumed control of LET Group, formerly known as Suncity Group, following the arrest and imprisonment of Alvin Chau in late 2021.
In this week’s statement, the SFC said that, since there was a change in control of LET in May 2022, listing rules restrict the company from making any major transactions for a period of 36 months unless it can meet certain requirements.
It also noted that LET and Summit Ascent are required to consult the Takeovers Executive and meet requirements under the Takeovers Code to engage in such activities, including obtaining shareholders’ approval of the disposal in a general meeting.
“However, it appears to the SFC that the [disposal] has not complied with the above-mentioned requirements,” the SFC said. “In particular, the sale and purchase agreement relating to the [disposal] had been executed and the completion of which was not made subject to obtaining the required approval of shareholders.
“The SFC has asked LET and Summit Ascent to address its concerns by providing an undertaking that the completion of the [disposal] is made conditional on shareholders’ approval and in full compliance with the relevant rules and regulations. However, both companies have failed to respond to the SFC. The SFC also has serious concerns about the conduct of the two companies and their management.”
The SFC added it considers that suspending the dealings in the shares of LET and Summit Ascent is desirable for the purpose of maintaining a fair and orderly market and protecting the interest of the investing public.
Prior to details of the planned sale becoming public last month, Summit Ascent had halted development of Tigre de Cristal Phase 2 in March 2022 due to the conflict in Ukraine, which saw significant economic restrictions placed on Russia by the global community. The company cited a changed business environment and the need to generate value for shareholders for that decision.
It also flagged in March 2023 that it may consider seeking “strategic local partners” to operate Tigre de Cristal as a result of challenges brought about by the war.
Meanwhile, Summit Ascent has invested heavily into Suntrust Resort Holdings – the Philippines company currently developing a US$1.1 billion hotel and casino in Manila’s Entertainment City – and has stated its desire to invest even more in the future.
In August, Summit Ascent said it was “naturally inclined … to seek one of the best and one of the most rapidly growing emerging gaming markets in Asia – the Philippines.”
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