South Shore Holdings May Be on the Brink of Folding as it Halts Trading

In Western culture, the number 13 is associated with bad luck. However, in Chinese culture, 13 is viewed differently, and is associated with prosperity and good fortune. That might have been part of the reason South Shore Holdings decided to name a property it was expanding in Macau “The 13,” but, in this case, Western culture won. The 13 was once marketed as what would ultimately be “the most luxurious hotel in the world,” complete with a VIP gaming experience that was in a league of its own. That dream never materialized and has met setbacks from the start. The dream has become a nightmare and South Shore can’t get wake up from it fast enough. The company has halted trading as losses mount and financial lenders begin taking possession of assets.

South Shore Holdings On the Edge

South Shore is expected to soon report its financial status for the fiscal year that ended March 31, but the writing is already on the wall. The company is likely to announce a loss of $122 million for the year, which would add to the $131 million it lost in the prior fiscal year. It has also halted its trading as four company executives abandoned ship last week.

The 13 was going to be South Shore’s crown jewel, the property that made it stand out from the crowd. However, it ran into problems from the start and never began generating revenue. It opened in August 2018 after several delays that stemmed from a lack of funding and, even as it opened its doors, it still wasn’t 100% ready. The 13 had only around 33% of its rooms ready and never attempted to add any gaming options, despite being in the gambling mecca of the world, which didn’t help turn things around.

Too Much Debt, Not Enough Income

South Shore tried to get out from under the debt it had with The 13 and began looking for someone to purchase half of the planned casino two years ago. Last year, it announced that it had something lined up, but those plans ultimately fell through. That led to the company not only continuing to shoulder the burden on its own, but also continuing to incur more debt as payments piled up. Ultimately, it worked out a deal with lenders to freeze certain assets and rework outstanding loans, but the stop-gap measure was short-lived. With well over $320 million outstanding and annual losses rising, backers became more nervous.

The situation for South Shore is going from bad to worse. With too much outstanding debt and no projections that things are going to turn around, Wise Park Business Limited has demanded repayment of the $76.37 million it is owed by the company. Given that there isn’t any money available, the lender is going after company assets, which South Shore listed as guarantees for the loans.

South Shore has confirmed that Wise Park is going to force the sale of company assets that cover its Paul Y. Engineering Group Limited arm, adding that it is likely that the subsidiary “will no longer be a subsidiary of the Company.” The assets of that arm are said to be worth approximately $19.3 million, and Wise Park has warned that it will take legal action against South Shore to secure the rest of the outstanding debt.