Silver Heritage hits delays in Nepal

Silver Heritage hits delays in Nepal

Wednesday, March 1, 2017 Posted by Scott Longley
Company suspends shares as it works out next steps

Sydney-listed Silver Heritage has moved to suspend its shares after it announced that unexpected delays in the development of its casino project in Nepal means it cannot currently put an estimate on an opening date.

The company said in an update that the delays it is experiencing may have a material effect on both the completion date and the final project cost at the Tiger Palace Resort Bhairahawa.

In a letter to shareholders, chief executive Mike Bolsover said the company was seeking the share suspension “to enable the company to manage its continuous disclosure obligations so that the board may complete its investigations to determine the extent of the anticipated delay and increase in project cost in order to properly inform the market.”

The company added that it hoped to be able to update shareholders within two to three weeks on both the completion date and any cost overruns.

Silver Heritage runs casinos in Cambodia and Nepal and runs gaming centre operations in Laos and Vietnam. According to its most recent results statement for the six months to June, the company achieved revenues of just US$7.5m and a pre-tax loss of US$1.5m.

At the time of its results, the company said it expected the completion of the Tiger Palace Resort by the end of 2016. It has a lending facility to pay for the construction with a consortium of Nepalese banks worth NPR750m (US$7m). The terms of the loan is 12 years repayable in monthly instalments but crucially the repayments doesn’t begin until after the construction is complete. The lending facility comes at an interest rate of, on average, 10 percent.

Silver Heritage only listed in August last year, raising A$19m in new capital in the process.

Totally Gaming says: Investors can count themselves lucky that the loan repayment depends on the completion of the project. Delays on any construction project are almost inevitable but the lack of visibility means the company has issues it needs to resolve quickly.

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