Fitch Ratings Inc has assigned Universal Entertainment Corp’s proposed U.S.-dollar senior notes – anticipated to mature in 2029 – an expected rating of ‘B-‘.
The Japanese conglomerate, the parent of the Okada Manila casino resort (pictured) in the Philippine capital Manila, said last week it would issue new notes in order to raise funds for the early redemption of its existing notes with a principal amount of US$760 million. The existing notes are set to mature in December 2024.
As part of the refinancing exercise, Universal Entertainment said Tiger Resort, Leisure and Entertainment Inc, the direct promoter of Okada Manila, has arranged a US$400-million loan from China Banking Corp.
The commencement date on the borrowing is set for August 1, with the amortisation schedule ending seven years from the borrowing date.
In its memo, Fitch observed that the proceeds of Universal Entertainment’s new notes, along with a concurrent bank loan to be raised by its Philippines operating subsidiary, “are to be used primarily for refinancing of Universal Entertainment’s existing notes due December 2024”.
It added: “The final rating is contingent upon the receipt of final documents conforming to the information already received, and verification that the total amount of new funds raised is sufficient to redeem the notes maturing in December 2024 in full.”
In May, Fitch Ratings Inc placed Universal Entertainment on ‘rating watch negative’ because of the company’s US$760-million notes due in December.
“While the company is in advanced stages of executing a refinancing plan, legally binding commitments to refinance are not in place. Fitch will resolve the rating watch negative, and affirm the rating at its current level, once the refinance plan is completed at the terms communicated,” stated the rating agency.
Fitch noted that Universal Entertainment’s credit profile “remains constrained by its limited operating scale”, as “over half” of the group’ earnings before interest, taxation, depreciation and amortisation (EBITDA) derives from its casino resort operation in the Philippines.
The institution forecast Universal Entertainment’s revenue growth “to flatten in 2024, before rising from 2025, albeit at a moderate rate”.
“However, we have revised down our forecast for revenue from the company’s integrated resort (IR) in the Philippines, although we believe prospects for the IR remain positive, underpinned by the Philippines’ healthy economic growth and continued recovery” in the number of visitor arrivals, added Fitch.
