Silver Heritage is on the brink of bankruptcy as the COVID-19 virus looks set to claim another high-profile victim.
The Australian Stock Exchange listed company has its headquarters in Hong Kong. It owns and runs two casinos in Nepal and specialises in offering gaming services in emerging countries. Silver Heritage called in administrators voluntarily in the hope it can stave of bankruptcy.
A statement to the Australian Stock Exchange reveals how bad matters are at Silver Heritage.
“We advise that on 18 May 2020 the directors of the Company resolved that the Company was insolvent or likely to become insolvent at some time in the future and the administrators should be appointed to the Company.”
“The board of the Company further resolved that Ryan Eagle and Amanda Coneyworth of KPMG be appointed as Voluntary Administrators of the Group pursuant to Section 436A of the Corporations Act 2001.”
“The Administrators now control the Company’s operations and are assessing the Company’s financial position. Further updates in respect of the administration will be released to the market in due course.”
Longstanding Troubles of Silver Heritage
Things have not been rosy at Silver Heritage for quite some time. The company thought all its Christmases had come at once when James Spenceley became the Chairman.
Australia’s Spenceley is a phenomenal businessman. He turned a $1 million investment into a $5 billion business with $1.8 billion annual revenue. That was when Spenceley was CEO of Vocus Communications.
Spenceley resigned from his role at Silver Heritage in October 2019 after only 18-months in the job. “Focussing on other business interests” was the reason given for Spenceley’s resignation.
The business guru stepped down at a time when Silver Heritage was looking for buyers for its Nepal casinos.
A buyer for its Tiger Palace Resort Bhairahawa agreed to pay US$33.9 million for the integrated resort. The sale fell through, however, when an Indian businessman twice failed to pay the deposit on time.
Silver Heritage saw its revenue stream almost halved in March 2019. Operations at Phoenix International Club in Vietnam ceased suddenly. Table games became unavailable due to a revised Investment Certificate. This resulted in the casinos closing for an indefinite period.
The casino’s closure resulted in a 45% decrease in revenue for Silver Heritage.
Phoenix’s closure and the resulting reduced revenue caused major issues. Silver Heritage overspent by US$12 million building Tiger Palace. A series of setbacks saw major delays. The company planned to use funds from the Phoenix investment to pay for this debt, but those plans disintegrated.
COVID-19 Virus Sees Nepal Casinos Close
Silver Heritage owns the Tiger Palace Resort Bhairahawa and The Millionaires Club & Casino in Kathmandu. Both casinos closed soon after the COVID-19 virus began sweeping around the world.
The company borrowed US$1 million earlier this year to help it keep afloat. That pot quickly ran dry and now Silver Heritage is in severe financial trouble. OCP, the company’s main lender, refuses to provide additional funds, administration is the only available way out.
“The company has been exploring options to generate liquidity and prior to the emergence of COVID-19 had received expressions of interest from several parties in respect of possible transactions. However, as a result of the emergence of COVID-19 and the forced temporary closure of the company’s facilities in Nepal, the timing in relation to consummating one of the transactions has become uncertain.”
Silver Heritage has 76 gaming tables and 250 pokies. It also employs 1,000 staff.
“The Board of Directors regret that these events have come to pass. We acknowledge all the Grou’s employees for their hard work and contribution.”