GGRAsia – Dividend restriction up to 2025 on Sands US$2.5bln credit

Dividend restriction up to 2025 on Sands US$2.5bln credit

May 12, 2023 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator Sands China Ltd has agreed to an 18-month extension of a dividend-restriction period as part of an amended and restated facility agreement worth circa US$2.49 billion, made with lenders and that was completed on Thursday.

The original agreement imposed a restriction on the ability of Sands China to declare or make any dividend payment or similar distribution, if its total commitments exceeded US$2.00 billion because of its decision to exercise a “commitments increase option”, and if its consolidated leverage ratio was greater than 4.00 to 1.00.

The original 2018 agreement provided for a US$2.00 billion revolving unsecured credit facility. In January 2021, Sands China exercised its option to increase the lenders’ total commitments by about US$494.0 million.

The period during which Sands China will commit to such dividend restriction will now extend up to and including January 1, 2025, rather than the prior end-date of July 31 this year. That is according to a Friday filing to the Hong Kong Stock Exchange.

The exception to such restriction is if, after giving effect to such a payment, Sands China’s “sum of the aggregate amount of cash and cash equivalents”; and the “aggregate amount of the undrawn facility under the 2018 loan and unused commitments under the firm’s other credit facilities”; is greater than US$2.00 billion.

Under the latest amendment, the extending lenders’ Hong Kong dollar-denominated commitments total just over HKD17.6 billion (US$2.25 billion). The U.S. dollar-denominated commitments total US$237 million.

The amended deal takes effect on July 31 this year. The termination date on the facility agreement under the latest amendment moves from July 31 this year, to July 31, 2025.

The latest change also amends the definition of Sands China’s “consolidated total debt” as per the agreement, so that it excludes any Sands China debt defined as “subordinated”.

Sands China said the latter covered a US$1-billion subordinated unsecured term loan facility made available by its United States-based parent Las Vegas Sands Corp.

Under Sands China’s amended and restated credit facility with external lenders, the firm’s maximum permitted consolidated leverage ratio is to be managed downward. It should decline from 6.25 times for the quarter ending March 31, 2024, down to 4.00 times for the quarter ending March 31, 2025.

In April 2020, the parent had said it would suspend its own dividend programme amid what at the time was the negative impact from the Covid-19 pandemic.

In late January this year, Las Vegas Sands amended with banking partners certain term loans regarding a US$1.50-billion revolving credit agreement. As part of the amendment, Sands China’s parent faced limitations regarding the payment of dividends until the end of 2023.