Suncity Board Implements Drastic Measures to Prioritize Financial Survival

The junket operator faced significant turmoil in the latter part of 2021 and the beginning of 2022 due to the arrest of its chairman, Alvin Chau, in November. As a result, Suncity decided to terminate its junket business. Chau, who has since resigned from SunCity, is facing allegations of running an illegal online betting operation. Following Chau’s arrest, Suncity also had to deal with loan default claims as a creditor argued that Chau had failed to repay a debt of HK$313.6m. Consequently, Suncity issued a warning that its business assets might be seized by creditors. In March, the company stated that Gold Yield Enterprises, a joint venture involving Suncity’s subsidiary Star Admiral and Alpha Era investment trust, had not repaid a loan of US$30m to Suncity. Within a week, Suncity expressed doubts about its ability to continue its operations, reporting a net loss of HK$646.2m for 2021. This loss was a result of two years of minimal revenue due to travel restrictions and the closure of the junket business. Suncity is now making every effort to sustain its business. The board has instructed the company to consolidate all resources towards survival, prioritizing intense cash preservation. It is implementing a strict cost-cutting program, including the sale of non-core businesses such as the Chinese property business and aircraft. In addition, Suncity has repurposed its Hoiana resort in Vietnam as a temporary quarantine hotel, reducing operating costs while minimizing disruption to guests. The company is also considering selling land parcels in Niseko and Miyako Islands in Japan for hotel development. Suncity’s subsidiary, Summit Ascent, operates the Tigre de Cristal resort in Vladivostok, Russia, which is performing well. However, plans to expand the resort have been delayed due to Russia’s invasion of Ukraine. The board highlighted the importance of cash preservation and generating positive earnings before interest, taxes, depreciation, and amortization (EBITDA) to sustain the group. With the decline of the Macau junket model, Suncity aims to reposition itself as an integrated resort operator. It plans to target various gaming segments, including VIP, premium mass, mass, slots, and non-gaming businesses, particularly focusing on jurisdictions with favorable returns and lower risks.