Las Vegas Sands Corp (LVS) has agreed with one of its lenders that the casino firm will, for the time being, not declare or pay any dividends unless it has more than US$1.0 billion in liquidity.
In return, the Bank of Nova Scotia has agreed to relax a lending covenant, said a Wednesday filing by the casino group.
The Bank of Nova Scotia is a party – alongside other banks – to a US$1.5-billion senior unsecured revolving credit facility for Las Vegas Sands, stated the filing.
United States-based Las Vegas Sands is the parent of Macau casino operator Sands China Ltd, and Singapore casino operator Marina Bay Sands Pte Ltd.
The parent swung to an attributable net loss of US$820 million in the second quarter, compared to net income of US$954 million in the same period in 2019, amid the Covid-19 pandemic.
Under the prior lending terms with Bank of Nova Scotia, Las Vegas Sands had been required to maintain a maximum consolidated leverage ratio of 4:1 on the last day of any fiscal quarter during the period October 31, 2020, up to and including December 31, 2021.
Under the newly-relaxed terms with the Canadian bank, Las Vegas Sands will need – during the relevant period - to maintain a minimum liquidity of US$350 million as of the last day of each month.
In April, Las Vegas Sands said it would suspend the company’s dividend programme, amid the negative impact from the Covid-19 pandemic. The group nonetheless said it would “continue previously-announced capital expenditure programmes in both Macau and Singapore”.
On September 11, Sands China agreed amendments to a 2018 credit facility with certain lenders including Bank of China Ltd, Macau Branch. The original agreement provides for a US$2.0-billion revolving unsecured credit facility, available until July 31, 2023.
The amendments gave Sands China the option to ask for up to an extra US$1.0 billion in borrowing.
In return, there was a dividend restriction applicable from July 1 this year, up to and including January 1, 2022. The dividend restriction applied in the event that the facility went above the original US$2.0 billion, and Sands China’s consolidated leverage ratio was greater than 4:1.
In June, the parent firm said Marina Bay Sands Pte Ltd had reached a deal with its lenders to amend an existing credit facility agreement.
Under that amendment – covering the financial quarters through to December 31, 2021 – the Marina Bay Sands operating unit was to be restricted in terms of any dividends, to a maximum of SGD500 million (US$364 million) per fiscal year, if its debt-to-consolidated adjusted earnings before interest, taxation, depreciation and amortisation, was higher than 4.25:1.
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"The Macau recovery continues to be disrupted by false starts, while the lack of [Chinese] public holidays for rest of the year should cap the pace of the rebound”
Andrew Lee and David Katz
Analysts at brokerage Jefferies LLC