New Silkroad Culturtainment said its South Korean unit faces ongoing litigation on the island of Jeju, while its plans for an integrated resort there have not progressed due to financing issues.
Announcing a wider loss and drop in revenue for 2019, the company said the Jeju Prosecutor’s Office has filed an appeal against a decision to acquit its Megaluck unit on charges of violating the Tourism Promotion Act.
The case involves an indictment for outsourcing the management of slot machines to Global Game Co.
Global Game also filed a civil lawsuit against MegaLuck in 2016 claiming damages of up to HK$20 million ($2.6 million). The Jeju District Court ruled that MegaLuck should pay damages of approximately $630,000 and later dismissed an appeal for that amount to be raised.
“With respect to our two operations in South Korea, although the relevant hotel development approval has been obtained, the land development of Glorious Hill in South Korea has not commenced due to a delay in project financing,” the Hong Kong-listed company said. “Furthermore, as the peak tourism season was significantly affected by the outbreak of the worldwide epidemic, MegaLuck’s business in South Korea had been badly affected with operation results turned red despite improvement in the first half of the year.”
Megaluck’s property on Jeju is now closed due to the coronavirus and it’s uncertain when it will be allowed to open.
Revenue from continuing operations decreased by 7.3 percent to HK$211.2 million in 2019. Revenue from the group’s wine business was up 3.5 percent, though revenue from entertainment fell 20.2 percent, hurt by trade tensions.