Macau casino operator SJM Holdings Ltd said on Thursday that it expected to raise approximately US$991 million net, via an offering of two tranches of U.S.-dollar denominated senior notes, due respectively in 2026 and 2028. The firm also said it would seek a listing of the notes on the Hong Kong Stock Exchange.
About 90 percent of the money to be raised, is to refinance loans linked to the group’s HKD39-billion (US$5.0-billion) Cotai resort, Grand Lisboa Palace. In its third-quarter earnings summary, issued in October, the casino group mentioned the possibility of Grand Lisboa Palace opening “during the first quarter of 2021”.
Brokerage Union Gaming Securities LLC said in a November note, it might be the year 2022 before operations at the property were fully up to speed, amid the Macau market’s recovery from the Covid-19 pandemic.
The issuer of the notes is Champion Path Holdings Ltd, a wholly-owned subsidiary of SJM Holdings. In its Thursday filing to the Hong Kong bourse, SJM Holdings said that it, the issuer, and a group of initial purchasers, had agreed on US$500 million, in 4.50-percent senior notes, due in 2026; and another US$500 million in 4.85-percent senior notes, due in 2028.
SJM Holdings’ existing lending includes: a Hong Kong-dollar term loan of HKD12.44 billion (US$1.6 billion); a US-dollar term loan of US$156 million; a Macau-pataca term loan of MOP1.38 billion (US$173 million) with a term of five years and five months.
There are also: a Hong Kong-dollar revolving credit facility of HKD8.29 billion; a U.S.-dollar revolving credit facility of US$104.0 million; and a Macau-pataca revolving credit facility of MOP921.6 million. The latter had been extended to five years and five months by a waiver obtained in August 2018.
SJM Holdings also highlighted in its Thursday regulatory statement, a connected transaction regarding the senior notes. The firm’s controlling shareholder, the privately-held Sociedade de Turismo e Diversões de Macau SA – known as STDM – and “certain directors” of SJM Holdings and its affiliates, have agreed to subscribe in aggregate to a principal amount of US$79.5 million of the notes.
None of the notes will be offered to the public in Hong Kong, SJM Holdings stated in the Thursday filing.
The initial purchasers of the senior notes are: BNP Paribas SA; Industrial and Commercial Bank of China (Macau) Ltd; Industrial and Commercial Bank of China (Asia) Ltd; Bank of China Ltd, Macau Branch; BOCI Asia Ltd; Banco Nacional Ultramarino SA; Bank of Communications Co Ltd, Macau Branch; China Construction Bank Corp Macau Branch; China International Capital Corp Hong Kong Securities Ltd; Oversea-Chinese Banking Corp Ltd; Tai Fung Bank Ltd; Bank of East Asia, Ltd; and Yue Xiu Securities Co Ltd.
Credit-rating firms Fitch Ratings Inc, and Moody’s Investors Service Inc, said respectively earlier this week that they had a ‘negative’ outlook on the credit profile of SJM Holdings as of the date the U.S.-dollar senior notes were proposed.
The institutions cited concerns regarding SJM Holdings’ speed of recovery from the downturn in Macau casino trading associated with the Covid-19 pandemic, and the pace at which operations in Grand Lisboa Palace might ramp up, once the property opens.
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