The Tiger Palace Resort in Nepal has been a thorn in its owner’s side almost since it opened. Silver Heritage Group has had to face several challenges at the property and the money hasn’t been flowing as it would have liked. When offers started coming in to take the resort, and other Nepal venues, off its hands, Silver Heritage began seriously considering making a deal. Currently in negotiations to consummate a sale, Silver Heritage has announced that it will hold off on issuing its updated financial report. There’s a big question mark over the statement, though, since Silver Heritage can’t sell Tiger Palace anytime soon.
In a filing with the Australian Securities Exchange (ASX), where the company is listed, on Tuesday, Silver Heritage explained that it was delaying the release of its interim financial report partly due to the negotiations. It added, “Financial statements are normally prepared on a going concern basis where (or when) there is neither the intention nor the need to materially curtail the scale of the entity’s operation.”
Silver Heritage is reportedly considering one of five deals presented to it that would see it receive $33.9 million for Tiger Palace, which sits on Nepal’s border with India, and for a club it manages in Nepal, the Millionaire’s Club and Casino in Kathmandu. Silver Heritage added in its filing, “As the company’s Nepal operations represent the company’s only remaining operating segments, a sale, if approved eventually by the shareholders of the company, would represent a material curtailment of the entity’s operations.”
Shareholder approval isn’t the only thing holding the deal back and is currently not the most important component of any possible transaction. Silver Heritage was slapped with an injunction by a Nepalese court that prevents it from selling any assets in the country, either in its entirety or partially. It also prevents the company from developing the property further.
Tiger Palace has been plagued by bad relationships, lackluster performance and embarrassing public relations fiascos. At one point, it was alleged that the development had extended onto protected land, and this is part of the reason for the injunction.
Silver Heritage added in its ASX filing, “The financial statements will not be prepared on a going concern basis, rather the interim financial statements will be prepared on a realisation basis of accounting, reflecting an orderly disposal of the company’s Nepal operations.” It added that the interim financials won’t be published as a result and “until the directors, in conjunction with the company’s auditors, have sufficiently considered the impact of this change in basis of preparation on the interim financial statements.”
