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SFC starts investigation into LET Group, Summit Ascent for potential breaches of rules

February 16, 2024 Casino & HotelIndustry Updates

The publicly listed businesses LET Group Holdings Ltd and Summit Ascent Holdings Ltd are the subject of an investigation by the Securities and Futures Commission (SFC) of Hong Kong, which announced on Wednesday that it has opened an investigation into the allegations of regulatory breaches over the massive sale of a significant asset. This relates to the January 29, 2024, notification to the regulator of the sale of assets in Russia for US$116 million.

Additionally, until further notice, the SFC has halted all trading in the shares of these companies. In their Wednesday stock exchange announcements, LET Group Holdings Ltd and Summit Ascent Holdings Ltd acknowledged the SFC’s actions.

Prior to this, on January 17, Summit Ascent Holdings Ltd. said that a business that it controlled in its entirety intended to sell G1 Entertainment LLC—the firm that has the gaming license for the Tigre de Cristal casino resort in the Russian Far East—for a sum of $116 million. The present conflict between Russia and Ukraine was blamed for the uncertainty surrounding this decision. Summit Ascent indirectly owned the in question asset via a company that it controlled 77.5 percent of.

Since January 11, the Hong Kong Stock Exchange has prohibited trading in Summit Ascent’s shares, and the parent company of Summit Ascent, LET Group Holdings Ltd, is also subject to a trading embargo.

The sale and purchase agreement for the significant disposal was negotiated and executed without shareholder approval, according to the SFC’s announcement on Wednesday. At least 75% of disinterested shareholders had to vote in favor of the transaction, and no more than 10% of the total number of disinterested shares may vote against it.

Moreover, the majority of the directors of LET Group and Summit Ascent quit after the sale was completed because they were unhappy with the terms of the agreement, leaving Andrew Lo Kai Bong as the chairman of both companies.

Both companies have not responded to SFC efforts to address concerns over the Russia arrangement. The conduct of the businesses and their management were a source of great worry for the SFC.

The SFC believes that in order to maintain a fair and orderly market and protect investors’ interests, trading in the shares of LET Group and Summit Ascent must be suspended. It also implied that both businesses could not have enough assets or operational activity following the acquisition to maintain their listing status on the Hong Kong stock market, which might make them ineligible for listing under the listing regulations. The SFC is still looking into this.

Original story by: GGRAsia

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