SFC raises alarm
Hong Kong’s Securities and Futures Commission (SFC) has warned it may delist two firms once run by imprisoned Macau gambling maven Alvin Chau.
concerns over a $116m sale of assets in Russia
The two gambling companies are LET Group Holdings Ltd and Summit Ascent Holdings Ltd. The SFC’s warning on Wednesday stems from the securities regulator’s concerns over a $116m sale of assets in Russia affecting the two firms.
BNN Bloomberg cited the SFC’s concern that both entities failed to comply with rules requiring that shareholders approve asset sales. The SEC fears the Russia sale may have stripped both LET and Summit of sufficient assets to warrant their continued listing on Hong Kong’s Hang Seng Index.
The SFC stated it has received no response from either LET or Summit after the regulator asked both firms to address the issue. Bloomberg reports the same lack of response to its queries.
The SFC has halted trading on shares of both firms, which operate out of China’s Special Administrative Region (SAR) of Hong Kong.
Firms in freefall
The SFC stated it has “serious concerns” about the management behind Summit and LET and the manner in which it is conducting business. LET was once a subsidiary of Chau’s gambling empire Suncity Group and holds a nearly 70% stake in Summit.
In 2022, LET rebranded with Andrew Lo taking the helm, but the executive hasn’t been able to steer the company anywhere near safety. Even before the SFC suspended trading on LET, share prices were at a near record low, plus it had cut its involvement managing Vietnam’s Hoiana Resort & Golf.
LET had been hit by a perfect storm
Bloomberg Intelligence Senior Gaming and Hospitality Analyst Angela Hanlee ostensibly said LET had been hit by a perfect storm on three fronts.
“Issues associated with Alvin Chau made its parent company’s junket business evaporate. Covid dragged tourist foot flow to Hoiana in Vietnam.” Hanlee stated the third blow came when LET “lost direction of its business in Vladivostok due to sanctions related to the Russia-Ukraine conflict.”
Summit has also been in terminal decline. Multiple executives resigned in a fallout over an unidentified transaction, leaving Lo as the only person on the company’s board.
According to the SFC, Summit indirectly owned the controversially sold Russia asset through a 77.5%-owned sub brand. GGRAsia, meanwhile, reported that the sale was of the gaming license holder of the Tigre de Cristal Resort & Casino in Russia’s Vladivostok.
A crumbling empire
The SFC probe into both firms simply exacerbates the long decline of Chau’s gambling empire. At its height, Chau’s Suncity Group was Macau’s leading junket operator, laying on luxury suites, private jets, and gambling credits for high rollers from mainland China.
The death knell, however, sounded in 2020 when Chinese police busted 2,260 illegal online gambling platforms and arrested over 75,000 people. A year later, Chinese officials made history by arresting Chau on charges of money laundering, the first industry big fish that Beijing took down.
In January 2023, Macau’s court found Chau guilty of over 100 charges, including criminal association, illicit gambling, and fraud, and sentenced him to 18 years in prison.