Oriental Regent Ltd, a subsidiary of 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 consideration of $116 million.
The acquisition of 100% of shares of G1 Entertainment by the Russian company would give them control of the Tigre de Cristal casino resort located near Vladivostok. This move is expected to significantly leverage the balance sheet of Summit Ascent Holdings, the parent company of Oriental Regent.
Oriental Regent is responsible for running the Tigre de Cristal casino facility under the gaming license granted to G1Entertainment by the Russian government. The sale of the subsidiary is expected to facilitate a smooth transition for Dalnevostochniy Aktiv LLC to continue operations of the resort, while also providing financial benefits to Summit Ascent Holdings.
The $116 million sales price is expected to be paid in Chinese yuan, and the proceeds from the sale are anticipated to improve the balance sheet figures of Summit Ascent Holdings, which experienced a decline in 2023. The parent company indicated that the loss incurred in 2023 would have a negative impact on shareholder equity.
Stakeholders such as Firich Enterprises Co Ltd, which holds a 20% share in Oriental Regent, stand to benefit from the $116 million price consideration. If the deal is completed, Firich is expected to collect $28 million in cash from the sale, and will effectively reduce its exposure in Russia to zero.
The sale of G1 Entertainment is expected to provide significant capitalization for Summit Ascent Holdings, as they may collect around $85 million from the deal and compensate for the negative impact of the loss sustained in 2023. Following the news of the sale, Summit Ascent’s shares were taken off the trading list in Hong Kong, and the shares of LET Group Ltd, the parent of Summit Ascent, were also held up pending the release of an inside information announcement.