South Shore Holdings has entered into an agreement to dispose of a 40% interest in luxury Macau hotel The 13.
Macau.- The agreement, which follows nine months of negotiations, will see the buyer, described as “an associate of a substantial shareholder”, acquire the substantial stake in the South Shore subsidiary that owns The 13.
According to the Hong Kong-listed South Shore Holdings, the developer and promoter of Hotel in Macau, this agreement could lead to the disposal of a 40% interest, for a total consideration of up to €86,7 million.
South Shore’s announcement was filed to the Hong Kong bourse on Tuesday morning, followed by a suspension of trading in the shares of South Shore with effect from 9am on that day.
It is likely they will also enter into a second agreement to acquire another 10%, South Shore said.
The 13 Hotel opened on 31 August 2018 following a series of delays due to funding problems, but the company recently revealed an average occupancy rate of just 8% through 30 June 2019.
Originally envisioned as a luxury casino-hotel, The 13 has space for 66 gaming tables but hasn’t yet applied for their use under a potential “service agreement” arrangement it previously reached with Macau concessionaire Melco Resorts and Entertainment.
Macau’s service agreements allow third party hospitality operators to have gaming in their properties under the license of one of the city’s six gaming licensees.
South Shore had not made any formal agreement with any Macau gaming concessionaires or sub-concessionaires in respect of gaming operations, the company noted in its annual report. That had resulted in a “significant reduction” in hotel occupancy and room rates compared to the anticipated ones; with a similar impact on revenue compared to what had been earlier forecast in the company’s business plans.