Suncity Group Gasping for Air, Promises Major Financial Cuts
Suncity Group, the junket operator that began to fall apart after Macau authorities arrested former CEO Alvin Chau, thought it might rebound. Now, however, it is realizing the full extent of its financial difficulties and is going to make major operational changes.
Suncity Group recently reported losses of $60 million last year. This downturn wasn’t surprising, considering Macau, where it had most of its operations, had a prolonged and unwanted date with COVID-19. However, the arrest of CEO Alvin Chau, before his resignation, in November exacerbated an already troubling situation.
Still, Suncity was confident better days were ahead. It stated last month that it was “too early” to paint a clear picture. The picture is apparently now completely in focus, and the image doesn’t look promising.
Suncity is going into emergency mode. It’s going to implement initiatives that focus on “intense cash preservation” and “uncompromising cost cutting,” according to an update. This could also include the offloading of a number of ventures so it can stay afloat.
Sink or Swim
Suncity has been hit on all fronts – Macau, Australia, Vietnam and the Philippines. The result is a company that is in dire straits and has been left gasping for air. The company is having difficulty paying its bills, which could result in creditors seizing assets per their financial agreements. It can longer count on the support of Chau, which means its operations in Vietnam, such as the Hoiana resort, are at risk of losing assets.
Macau and the Philippines already decided that the company doesn’t deserve a license, and Suncity also became a part of the casino industry scandal in Australia. The latter is also likely to bring serious fallout once regulators and officials determine who to target.
Intense cash preservation is the group’s highest priority. The group is now implementing the most uncompromising cost-cutting programme ever. Non-core businesses have been sold and will continue to be sold, such as the disposal of the mainland Chinese property business and the aircraft in 2021,” Suncity’s board said in a statement.
The Hoiana resort in Vietnam became a temporary COVID-19 quarantine hotel. This doesn’t help promote its image as a top-notch destination. Suncity is also in the process of exploring the sale of property in Niseko and Miyako in Japan. It previously wanted to use this land for hotel development.
Russia Future Still Uncertain
Suncity recently expressed confidence that it the Tigre de Cristal integrated resort in Russia’s Far East was still viable. The company has a controlling stake in Summit Ascent, its direct owner, which said that Russia’s invasion of Ukraine would not have a lasting impact, according to Suncity.
The company is confident that it can continue to move forward with Tigre de Cristal. However, it already put expansion plans on hold because of the illegal war.
Still, as days turn into months and the war drags on, there exists the possibility that success in the region may be untenable. NagaCorp already left, and sanctions against Russia are complicating all industries.
As the group continues to transform into a pan-Asian integrated resort operator, the Group will be targeting all traditional gaming business segments, including VIP, premium mass, mass, slots and non-gaming businesses,” added Suncity.
Suncity is running out of options and is contemplating the sale of more assets just to stay afloat. While there are possibilities in the Asian gaming market, finding success following its egregious missteps might prove to be an insurmountable task.
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