Macau casino concessionaire SJM Holdings Ltd has “sufficient liquidity” to fund the HKD1.75-billion (US$224.8-million) acquisition of the L’Arc Hotel complex on the Macau peninsula, but the deal “will reduce” the casino firm’s “liquidity buffer”. That is according to a recent memo from Lucror Analytics, a Singapore-based specialist in credit research.
The L’Arc Hotel (pictured) is a downtown property that is the host venue for one of the SJM group’s satellite gaming venues, Casino L’Arc Macau.
On Thursday, SJM Holdings said L’Arc Hotel was part of a “core peninsula cluster,” under the licence of the group’s unit, SJM Resorts Ltd. The group’s own Casino Lisboa and associated Hotel Lisboa, as well as the group’s Grand Lisboa property, are close to L’Arc Hotel.
A principal liability of L’Arc Hotel is an outstanding bank loan of nearly HKD1.93 billion.
Under the terms of the transaction announced last week, SJM Holdings will spend an aggregate amount of HKD1.75 billion for the acquisition of L’Arc Hotel, comprising a nominal purchase price for the issued shares of the holding company and the repayment of a portion of the outstanding loan.
The shortfall on the outstanding loan – circa HKD177.53 million – is to be borne by the vendors, funded through a loan to be provided by SJM Resorts under a separately-executed agreement.
As per Lucror’s note, the SJM group “intends to fund the [supporting] loan by drawing down on its credit facilities”.
“We note that SJM has sufficient liquidity to fund the acquisition, albeit the transactions – totalling HKD1.93 billion, including the loan advance – will reduce its liquidity buffer,” wrote Lucror senior credit analyst Leonard Law.
At end-September, according to Lucror, the casino group “had an unrestricted cash balance of HKD2.5 billion and undrawn credit facilities of HKD2.7 billion”.
“We estimate that the company’s free cash flow was neutral in the third quarter of 2025, after being negative in the first half,” stated the analyst.
The deal for L’Arc Hotel is due to be completed on December 18. As a result, Casino L’Arc Macau will no longer be managed under a service agreement as a satellite casino, and it will be absorbed into SJM Holdings’ core gaming operations as a self-owned and self-operated gaming venue.
In a note last week, investment bank JP Morgan said the HKD1.75-billion price for the L’Arc Hotel complex “looks attractive” for the SJM group, given its “prime location” on the Macau peninsula.
