Silver Heritage on the edge of bankruptcy as it enters administration


It shouldn’t come as a shock to anyone that the coronavirus pandemic is going to force businesses of all kinds to step back and reevaluate their operations as economic losses continue to mount. Few industries, though, have been hit as hard as the casino realm, where venues literally dropped from making money to making zero in less than 24 hours. Some casino operators are going to be able to weather the storm more easily, supported by longevity and solid foundations that have allowed them to endure. Others, though, are going to have a more difficult time, especially if they were already suffering before the coronavirus punched the world in the gut. Silver Heritage Group falls into the second category, and has entered voluntary administration in an attempt to tread water until it can reach solid ground.

silver-heritage-on-the-edge-of-bankruptcy-as-it-enters-administrationSilver Heritage was forced to call off its operations in Nepal soon after the coronavirus pandemic began. The company’s Tiger Palace Resort Bhairahawa and The Millionaires Club & Casino, Kathmandu suddenly found themselves in a bad way, after the company was already having to deal with setbacks that had cost it money. The Australian-listed gaming company announced today that it is now collaborating with KPMG, who it brought in as an administrator to help figure out what needs to happen to keep the company from sinking.

The voluntary administration is similar to bankruptcy protection in virtually every way. It will now allow KPMG to objectively dissect the company’s operations to look for areas that may be able to be used as financial flotation devices, and the sale of the Nepalese assets will once again be put on the table. That idea had come up previously and Silver Heritage almost secured a deal, but the potential buyers changed their minds.

Earlier this year, Silver Heritage picked up a loan for $1 million that allowed the company to continue moving toward the shore, but that piggy bank has gone dry, which is why the voluntary administration is necessary. It confirms in a statement, “The company had 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.”

The current situation faced by Silver Heritage is the result of issues the company has experienced annually for the past several years. Its largest project, Tiger Palace, was well behind schedule and over budget when it finally opened in the first quarter of 2018. The company needed to figure out how to cover the $12 million extra that was needed to complete the project, and knew that it could count on the Phoenix International Club in Vietnam to provide some of that support. Silver Heritage was managing the property’s gaming operations at the time; however, the venue lost its gaming tables license in 2019, dealing Silver Heritage a huge blow. The previous year, Phoenix had been responsible for 45% of the company’s revenue. The Nepalese operations haven’t been able to close the gap completely, and the coronavirus outbreak has only made things worse. With all the turmoil, a sale of assets is an extremely likely outcome.