Oriental Regent Ltd, a branch of the Hong Kong-listed Summit Ascent Holdings Ltd, has announced plans to sell its gaming and hotel operations in Russia. The company is selling its wholly-owned subsidiary G1 Entertainment LLC to a Russian entity Dalnevostochniy Aktiv LLC for a price of $116 million.
The acquisition of 100% of shares of G1 Entertainment would enable the Russian company to control the Tigre de Cristal casino resort, located near Vladivostok. This sale would significantly leverage the balance sheet of its parent Summit Ascent Holdings. It was reported that the sales price of $116 million is to be paid in Chinese yuan.
Oriental Regent is a company that is 77.5% owned by Summit Ascent Holdings. The majority share was used to control the Tigre de Cristal casino facility through the operator G1 Entertainment, under the gaming license granted by the Russian government. The sale of G1 Entertainment to Dalnevostochniy Aktiv LLC might facilitate a smooth transition for the Russian entity to continue operations of the resort, while also boosting the balance sheet figures of Summit Ascent Holdings.
The parent company stated that the loss in 2023 consisted of US$14,606,000, due to foreign-operation exchange differences reclassification, and would have a negative impact of US$3,784,000 on shareholder equity. However, with the $116 million sale pending, the company and its shareholders are expected to benefit, including Taiwan-based Firich Enterprises Co Ltd, which holds a 20% share in Oriental Regent. Firich is reportedly set to collect $28 million in cash from the sale and reduce its exposure in Russia to zero.
Summit Ascent Holdings, with a 77.5% share in Oriental Regent Ltd, may capitalize significantly on the $116 million sale. The deal is pending closure, and as soon as the news broke on January 11, 2024, Summit Ascent’s shares were taken off the trading list in Hong Kong. The parent company of Summit Ascent, LET Group Ltd, also had its shares held up “pending the release of an inside information announcement,” as the company reported.