(Bloomberg) -- 13 Holdings Ltd. missed a Monday deadline to open its luxury hotel in Macau, a condition of a HK$3 billion ($384 million) loan from Bank of Communications Co. for the gaming project just off the Cotai strip, according to people familiar with the matter.
The $1.6 billion development, started by 13 Holdings co-chairman Stephen Hung, formerly co-head of Asia investment banking at Merrill Lynch, now aims to open before the end of the year, said the people, who asked not to be identified because the discussions are confidential.
Set to feature 200 villas with furniture evocative of the French Baroque period, marble Roman baths and 24-hour butler service, the project was planned before China's crackdown on corruption scared VIPs away and sent casino revenue into a slump for almost three years.
A spokeswoman for 13 Holdings said the company has obtained the occupation permit from Macau's government, is currently in the process of obtaining necessary licenses for the pre-opening and operational phase, and is in the final stages of completion of the property known as The 13 Hotel.
The entrance to the hotel over the weekend was blocked by construction materials.
Shares dropped as much as 2.9 percent in Monday afternoon trading. The company has lost more than half of its market value this year.
A spokesman for Bank of Communications in Hong Kong declined to comment on the loan or its terms, while another in Shanghai didn't immediately comment.
13 Holdings has raised $1.2 billion for the project, according to exchange filings. Total budget for the development is $1.6 billion, meaning $400 million is needed to finish construction of the hotel, and pay financing fees as well as costs associated with a casino, according to people with knowledge of the matter.
“I think there is a certain amount of skepticism in the capital markets regarding a project of this scope,” said Andrew Klebanow, Las Vegas-based senior partner of Global Market Advisors LLC. “The downturn in the very high-end market certainly illustrated that this market segment is vulnerable to changes in central government policy as well as traditional economic forces.”
For more, see this Gadfly column on why 13 Holdings needs a new owner
The bulk of 13 Holding's assets are pledged, according to the company's most recent annual results announcement. 13 Holdings said it has plans to run a casino on the site of the hotel project. That means it would have to work with one of the six casino operators with concessions to run gaming tables.
Even as VIPs have returned to Macau and gaming revenue has rebounded in the past year, operators including Wynn Resorts Ltd. and Las Vegas Sands Corp. have shifted focus to attracting casual gamblers and visitors to the only Chinese territory where casinos are allowed.
--With assistance from Robert Olsen
To contact the reporters on this story: Daniela Wei in Hong Kong at jwei74@bloomberg.net, Annie Lee in Hong Kong at olee42@bloomberg.net.
To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net, Neha D'silva at ndsilva1@bloomberg.net, Sheridan Prasso
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