Hong Kong Bourse Warns Lead Manila IR Investor To Regain Compliance

April 9, 2024
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The Hong Kong Stock Exchange has ordered the controlling interest of Manila’s next integrated resort to regain compliance with bourse rules or be delisted, with disciplinary action possible against its surviving director.
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The Hong Kong Stock Exchange has ordered the controlling interest of Manila’s next integrated resort (IR) to regain compliance with bourse rules or be delisted, with disciplinary action possible against its surviving director.

LET Group Holdings Limited, the listco arm of the former Suncity junket empire, and its subsidiary Summit Ascent received letters of warning from the Hong Kong bourse on Friday (April 5), according to dual company filings on Monday.

The letters laid out “resumption guidance” for the two companies in the wake of a controversial attempted sale of the Tigre de Cristal casino hotel near Vladivostok that triggered mass board resignations, the suspension of trading and a bourse probe in February.

The sole remaining director of the companies is dual chairman Andrew Lo, a lieutenant to former Suncity boss Alvin Chau. Lo took control of the Suncity empire after Chau was imprisoned for 18 years in early 2023.

The stock exchange letters ordered the companies to “demonstrate that there is no reasonable regulatory concern about the integrity or character of the group’s management and/or the integrity or character of any persons with substantial influence over the group’s management and operations, which may pose a risk to investors and damage market confidence”.

The companies must also publish outstanding financial results and account for auditing changes, as well as prove they have assets and operations to justify the retention of a market listing.

Both companies must also re-populate their boards and various committees, with Summit Ascent also required to restore two authorised representatives and a company secretary.

However, the companies remain the subject of an investigation by the Hong Kong Securities and Futures Commission (SFC), which is not only investigating the departure of all but one board member, but also probing possible breaches of conduct by Lo himself, and of shareholder approval requirements for the attempted offloading of the Tigre de Cristal.

The SFC noted in its February 14 statement that neither company had responded to its written requests that shareholder approval be secured.

Five days after the SFC statement, the Russian would-be purchaser of the casino served a subsidiary of LET and Summit Ascent with a unilateral termination notice for the acquisition, prompting LET and Summit Ascent to announce possible legal action against the purchaser.

Neither company has updated the market on the matter since that time.

For the time being, the stock exchange has also warned the two companies that although its deadline for resuming trading is July 10, 2025, to avoid delisting, the exchange could intervene much earlier if it is unhappy with the company’s progress.

Such intervention could involve immediate delisting, a truncated compliance deadline, and sanctions against the companies and Lo personally.

In response, LET and Summit Ascent said they are “taking steps” to comply with listing rules and will update investors as necessary.

LET and Summit Ascent are the controlling investors in Westside City, an integrated resort in Manila’s Entertainment City and the fifth facility scheduled to open there.

The project’s investors, including Lo and local partner Megaworld, have faced financial problems and a shortfall in funding some $1.1bn in construction costs. This shortfall preceded the attempt to sell Tigre de Cristal and the divestment of other LET assets in Asia.

Philippine gambling regulator PAGCOR remains tight-lipped on the regulatory fallout for the project and has declined to comment to Vixio GamblingCompliance on its course of action should the Hong Kong bourse and/or the Hong Kong SFC punish the companies.

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