In a filing to the Australian Stock Exchange on Friday, Silver Heritage Group Ltd. announced the launch of a fully underwritten accelerated renounceable entitlement offer.
The proceeds of the offer, expected to be around US$14.4 million, will be used to “fund completion and construction and fit out of Tiger Palace, to provide working capital, and to pay the costs of the Entitlement Offer,” said the company.
According to the filing, the final revised budget for completion of the integrated resort has now increased to US$51.8 million, up US$11.8 million from the original budgeted cost, and a phased opening is now planned for the resort – September 2017 for the hotel and hospitality areas, and November 2017 for the entire resort, including casino operations.
Silver Heritage chief executive Mike Bolsover said that, while there have been challenges developing the resort, there is now light at the end of the tunnel.
“We are in the right place geographically to address the rapidly growing Indian Middle-Class, we are proven operators of casinos in emerging jurisdictions and, whilst we have had a challenging period developing the subcontinent’s first Integrated Resort, we have learned from our experience and have an excellent team in place now to execute the final stages of the build and pre-opening through to operations in the second half of the year.”
The integrated resort in Nepal first announced it had encountered unexpected delays and cost overruns in February this year.
The operator said the project had run over budget due to variations from the original plan for the casino and public areas, as well as land improvements. It also faced issues with costs arising from local contractors and delays in gaining approval from the Nepal Central Bank to raise the equity ceiling for the local operating unit, which affected the company’s ability to remit money into the country.
Management of Silver Heritage said they had undertaken a thorough review of the project and its supervisory practices and had commissioned two independent reports. As a result, a new project management team has been appointed, and new project controls implemented.
The Entitlement Offer is a 2:1 accelerated renounceable entitlement offer of ordinary shares at an offer price of A$0.05 per New Share. The Offer Price represents a discount of approximately 77.3 percent to the closing price of ordinary shares listed on Feb 26, 2017.
Under the Entitlement Offer, eligible shareholders are entitled to subscribe to two new shares for every one existing share held at 7.00pm (Sydney time) on July 4, 2017.