Summit Ascent to subscribe to US$247.5m convertible bonds in Suntrust

Summit Ascent to subscribe to US$247.5m convertible bonds in Suntrust

The move is to help Suntrust Resort Holdings fund the development of its casino hotel project in Manila.

The Philippines.- Summit Ascent Investments, a subsidiary of Hong Kong-listed Summit Ascent Holdings, has agreed to subscribe to convertible bonds worth up to PHP13.51bn (US$247.5m) issued by Suntrust Resort Holdings. The move is to help fund the development of a casino hotel project located at Westside City in Manila, the capital of the Philippines.

The decision comes after Suntrust encountered challenges in making timely interest payments due under its 2020 and 2022 convertible bonds. The financial assistance aims to mitigate potential setbacks that might deter other lenders and investors from providing the funding to complete the main hotel casino.

According to the company’s statement, the construction and development costs leading up to the commencement of Suntrust’s main hotel casino operations have been estimated at US$1.1bn, with approximately US$491m already raised.

Developed by Philippine conglomerate Alliance Global Group, the complex will have 400 gaming tables and 1,200 slot machines, 450 five-star hotel rooms and 960 parking spaces covering 44,000 square metres. 

Suntrust previously reported that construction work on the IR had reached level 10 by the end of the first quarter and was still on track for a 2024 launch. Summit Ascent Holdings announced in June that investors linked to Suntrust would need to inject an additional PHP19.37bn as cash equity into the project.

The latest filing by Summit Ascent Holdings indicates that the new convertible bond exercise is offered at a significant discount, representing approximately 38.9 per cent and approximately 33.3 per cent lower conversion prices compared to the 2020 and 2022 convertible bond prices, respectively. 

The new conversion price of PHP1.10 per share presents a premium of approximately 29.41 per cent over the closing price of PHP0.85 per Suntrust share on the Philippine Stock Exchange’s last trading day before the announcement.

The new convertible bonds will mature on their eighth anniversary, with a possibility of extension to the tenth. Currently, the principal amount and accrued interest for the 2020 and 2022 convertible bonds amount to around PHP6.19bn and PHP6.85bn, respectively.

The new funding initiative is subject to regulatory approval in the Philippines and a special general meeting of Summit Ascent Holdings shareholders. A circular is expected to be dispatched to shareholders on August 25.

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