South Shore Holdings may soon no longer exist, at least not in its current form. The casino operator had big plans for The 13 hotel in Macau, expecting to turn it into a large resort that would ultimately compete with the incumbent venues. However, circumstances proved to be a challenge and The 13 has never fulfilled its dream. As a result, a couple of board members were already forced out by a shareholder, and that same entity is now pushing for the company to be dissolved. Global Allocation Fund (GAF) has requested a Special General Meeting (SGM) of South Shore shareholders, and the company has no option but to oblige.
GAF is requesting that shareholders respond to its request that the company be “wound up pursuant to bye-law 164(2) of the Company’s bye-laws and the relevant provisions of the Bermuda Companies Act 1981,” according to a South Shore notice (pdf) from today. That section of the bye-laws indicates that a company can be “wound up,” or liquidated, either voluntarily or through a court order. To begin the process, shareholders have the right to discuss whether any liquidation is warranted.
The 13 has been a black eye for South Shore for the past couple of years and has never realized its full potential. The company has tried, unsuccessfully, to sell the property in order to help reduce its debts, and its most recent attempt fell through in September. It now hopes it can remove The 13 from its books before the end of March, but that may be difficult under the current COVID-19-induced economic reductions.
GAF holds right at 10% of South Shore, giving it the legal right to call the SGM per South Shore’s bye-laws. It informed the company last month of its intentions, with South Shore indicating that GAF explained that the move was needed to address “the net liabilities position of the Group, the suspension of operations of the Hotel and the poor performance of the Hotel generally.” It added, “[GAF] expresses its belief that the remaining value in the Company will best be maximized with an independent unwind process supervised by a court.”
GAF is adept at pulling the strings at South Shore. Earlier this year, it was able to convince the company that two board members, Lau Tom Ko Yuen and Tse Cho Tseung, had to go, and they both stepped down before a recall vote could be held. However, South Shore isn’t convinced that GAF’s intentions of liquidating the company are valid and doesn’t believe the shareholder will be able to prove its case. South Shore asserts, “Shareholders and investors of the Company holding some 25% of the issued share capital of the Company have expressed their opposition to the winding up of the Company. Given this opposition, the Board expects that it is almost a certainty that the proposed resolution will not be passed by the requisite majority.”