Macau casino operator SJM Holdings Ltd is likely to report it had negative free cash flow in 2025 due to its acquisition of the L’Arc Hotel complex on the city’s peninsula, as well as the firm’s pledged purchase of certain gaming space at its historic Hotel Lisboa next door.
That is according to Lucror Analytics, a Singapore-based specialist in credit research. But the institution added that SJM Holdings should have “adequate” liquidity, given it has funding in place to repay its bonds maturing this year.
SJM Holdings is paying an aggregate of HKD1.75 billion (US$224.8 billion) for the acquisition of Casino L’Arc Macau – formerly a satellite gaming venue – and its associated hotel. The complex became a company-managed venue with effect from December 30.
SJM Holdings – the predominant supplier of gaming rights to Macau’s legacy satellite-casino sector – saw the era of that business segment conclude at year-end.
Lucror Analytics suggested in its note carried on the Smartkarma platform, that SJM Holdings’ profitability would in likelihood be hurt by costs related to satellite closures.
The credit research specialist also noted: “Our fundamental credit bias on SJM is ‘negative’, due to the company’s weak cash-flow generation and elevated leverage relative to peers.”
Nonetheless the memo suggested SJM Holdings still has “adequate” liquidity, in the basis it obtained funding to repay its bonds maturing this year.
The company recently announced a fresh issuance of US$540-million in senior notes at 6.500-percent per annum, due 2031 at par. Proceeds would assist refinancing, said the casino group, including repurchase for cash, of its outstanding 4.500-percent senior notes due on January 27 this year.
Lucror Analytics also observed that the gaming firm also has respectively, HKD1.25-billion and MOP300-million (US$37.4 million) in issued bonds, with both sets due in May this year.
Their refinancing would be supported by an SJM Holdings HKD1.62-billion term loan obtained in November, suggested Lucror Analytics.
With that, and a HKD1.5-billion revolving loan facility obtained in November, SJM Holdings’ syndicated credit facilities were “upsized” to HKD22.4 billion from HKD19 billion previously, the credit research firm observed.
Lucror Analystics also noted that the Macau casino operator had in December drawn down the HKD1.5-billion revolving loan, plus HKD500-million of its existing revolving credit facilities to fund the acquisition of the L’Arc Hotel complex.
