Asian casino operator Silver Heritage Group Ltd says it has obtained a secured loan worth US$1 million from its majority bond holders. The money – provided under a number of conditions – will be used for working capital, according to a Friday filing to the Australian Securities Exchange.
The cash will be utilised “in accordance with the budget agreed between the company and the lenders for all costs and expenses of the group outside Nepal over the next six months,” the document added.
In September the group has said it was continuing to negotiate a possible sale of its Nepal operations, but “on a non-exclusive basis”.
Silver Heritage owns and operates the casino property Tiger Palace Resort Bhairahawa on Nepal’s border with India. The group also manages gaming at the Millionaire’s Club and Casino, in Kathmandu, the capital of Nepal.
Silver Heritage lost what had been a key gaming revenue generator for the group – management of a casino at the Phoenix International Club near Hanoi in Vietnam – at the start of March, after that venue’s general manager said the local authorities were no longer permitting table games there.
Later that month, Silver Heritage announced it was to receive US$5.25 million in compensation from its former partner in that Vietnam business.
The freshly-announced loan for the casino group comes with significant conditions attached to it. Interest on the advance is 15 percent per year, payable upon maturity, with the latter date being December 31, 2021.
The loan providers are: OL Master (Singapore Fund 1) Pte Ltd; Orchard Landmark II (Singapore Fund 1) Pte Ltd; and OL Master Ltd, being jointly the majority bondholders of the company under a bond instrument dated August 26, 2016. They also hold collectively 9.46 percent of Silver Heritage’s issued share capital.
The lenders are also being granted options on just over 189 million shares of the company, at a strike price of AUD0.0078 (US$0.00545) per ordinary share, “for which shareholder approval is not required,” according to Friday’s filing.
Friday’s announcement outlined that there would be an extension on the maturity of the existing bonds, from April 2, 2021, to December 31, 2021. It also said interest due under the existing bonds on the next two interest payment dates – February 26, 2020 and August 26, 2020 would be “capitalised”.
Existing financial covenants were also to be replaced with a number of specific milestones, according to Friday’s filing.
By September 2020, the last nine months of group adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) should be “at least US$500,000”.
By December 2020, the last 12 months of group adjusted EBITDA must be “at least US$1.2 million”. As of March 2021 , the last 12 months of such EBITDA must be a minimum of US$2 million; by June 2021 it must be US$2.5 million; and by September 2021 the last 12 months of group adjusted EBITDA must be at least US$3 million, according to the filing.
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Vitaly Umansky, Eunice Lee and Kelsey Zhu
Sanford Bernstein analysts