Mocha Club founder invests in Paradise

Mocha Club founder Chang Wang is investing in Macau’s Paradise Entertainment through the purchase of warrants carrying the rights to subscribe for shares.

The net proceeds from the subscription of warrants are about HK$1.5 million, Paradise said in a filing with the Hong Kong Stock Exchange. However, if the rights are exercised in full, the company will receive net proceeds of $71.5 million.

Paradise said it is interested in having Chang Wang as a strategic investor, who may be able to help the company in raising additional capital in the long run. It also said it will “further explore the potential business opportunity that Mr Chang can introduce taking into account his extensive business connections in the gaming industry.”

It added, it has no current plans in mind.

Paradise said it had considered alternative methods of fundraising, but that in current market conditions any shares placed would need to be at a deep discount. It also said that other financing or interest-bearing securities would place a burden on the company.

Given the group posted a loss for 2015 and in the first half of this year, it also said it would be difficult to find an underwriter willing to back an open offer or rights issue to shareholders.

Paradise posted a loss of about HK$149 million for 2015, which ballooned to $410.5 million in the first half of 2016.

“It is noted that the current market sentiment is not positive and the potential investors are sluggish in new investment,” the filing said. “The uncertainties in the future and local economy development cause investors to become more conservative and are unwilling to invest substantial sum in the shares.”