The Chairman and controlling shareholder of Hong Kong-listed LET Group, Andrew Lo, has resumed plans to sell off the company’s entire interest in Russian integrated resort Tigre de Cristal, located in the Primorye Economic Zone near Vladivostok.
According to details filed with the Hong Kong Stock Exchange overnight, LET Group received a Requisition Notice late last week from the nominee holder of shares owned by Major Success Group Ltd – which in turn is wholly-owned by Lo – requesting an Extraordinary General Meeting (EGM) to vote on a Disposal Plan for the sale of its 77.5% stake in Oriental Regent, which in turn owns the entire issued share capital in Tigre de Cristal’s Operating entity G1 Entertainment Limited Liability Company.
A similar Special General Meeting has been requested for shareholders of Summit Ascent Holdings, the LET Group subsidiary which holds the 77.5% Oriental Region stake. LET Group holds a 69.66% interest in Summit Ascent, while Lo and Major Success hold 72.07% of LET Group.
Lo has already attempted one unsuccessful sale of Tigre de Cristal, having announced in January an agreement to sell its stake before the Russian buyer pulled out of the deal. That announcement had significant consequences, with all directors of both LET Group and Summit Ascent – other than Lo – resigning their positions and Lo being reprimanded by Hong Kong’s Securities and Futures Commission for failing to follow proper procedures. Some of those departed directors have since returned.
In announcing details of the new Disposal Plan overnight, LET Group explained that its Russian casino interest had been adversely affected by the conflict in Ukraine and subsequent sanctions imposed on Russia by the United States, European Union and other allies.
“The escalation in the Russia-Ukraine conflict has a negative effect on the motivation and choices for international tourists to freely travel into and out of Russia, which affects Tigre de Cristal’s customer base,” it said.
“Sanctions have become more stringent, and also apply to enterprises established or operated in Russia, such as G1 Entertainment. The risks arising therefrom include the ongoing Russia-Ukraine military conflict, sanction risks, supply chain risks, prohibition of fund transfer risks, lack of international tourism, currency risks and human resources risks, including the risk of foreign travel or recruitment restrictions which would impact on the Group’s ability to manage or monitor Tigre de Cristal’s operation.
“Any escalation of political or operational risks faced by Tigre de Cristal may also have a domino effect on other businesses of the Company. Up to the date of the Requisition Notice, there is no indication on when the military conflict and the related sanctions will end.”
Assuming the proposed Disposal Plan is passed, which seems inevitable given Lo’s interest, LET Group would take steps to negotiate and enter into an agreement for the disposal of Oriental Regent and to implement the disposal accordingly, the company added.
Under the terms of the Disposal Plan, the entire stake in Oriental Regent would be offloaded to a buyer that must be a third party independent to LET Group and Summit Ascent, at a sale price of no less than US$92.8 million. This, the company noted, is 80% of the original US$116 million price it had negotiated under the January deal that later fell through.
The sale of Tigre de Cristal would, LET Group said, allow it to focus its energies on its land parcels in Japan and moreso completion of its US$1.1 billion integrated resort development in Manila, Philippines.
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