GGRAsia – Macau Legend US$77mln loss in 2022, seeks credit facility

Macau Legend US$77mln loss in 2022, seeks credit facility

Apr 03, 2023 Newsdesk Latest News, Macau, Top of the deck

Gaming and hotel services firm Macau Legend Development Ltd reported a full-year 2022 loss of HKD607.2 million (US$77.4 million), on revenue that fell by 37.3 percent year-on-year, to HKD711.6 million. The full-year loss was an improvement on the HKD1.19-billion loss recorded in 2021.

The group’s loss improved in 2022 due to “no impairment losses” recognised for a gaming project in the maritime nation of Cabo Verde, off the coast of West Africa, stated the firm in a Friday filing.

Macau Legend also said it had “undertaken various mitigating measures” to navigate the downturn in 2022 in the Macau gaming market, including “measures to control its operating costs and expenses”.

The group reported negative adjusted earnings before interest, taxation, depreciation, and amortisation (EBITDA) to the tune of HKD218.8 million, an improvement on the HKD300.3-million EBITDA loss in 2021.

The group’s reported gaming revenue fell by 43.4 percent year-on-year, to HKD519.1 million in 2022. In Macau, such revenue was down 50.1 percent on the prior year, to just under HKD450.9 million.

During the first half of last year, the Hong Kong-listed firm had business linked to three casinos in Macau – Landmark, Babylon, and Legend Palace – under a so-called services agreement with Macau licensee SJM Holdings Ltd.

Gaming revenue in Macau decreased “mainly due to the expiration of the service agreement” with the SJM group on June 26, 2022, stated Macau Legend.

Macau Legend has a tourism complex called Macau Fisherman’s Wharf, a waterfront area close to the Outer Harbour Ferry Terminal on Macau peninsula, where the Babylon and Legend Palace casinos are located. The company also runs the Savan Legend gaming resort in Laos.

In January, Macau Legend confirmed to GGRAsia that it was only providing casino satellite services at Casino Legend Palace (pictured), under a renewed agreement with SJM Holdings, for a term of three years commencing January 1 this year.

The firm also said that same month that it had “ceased its VIP gaming promotion business” in Macau.

Macau Legend flagged in its latest annual report the “existence of material uncertainty” that “may cast significant doubt over the group’s ability to continue as a going concern.”

It added: “The group is in the process of negotiation for restructuring the repayment schedule of the existing bank borrowing and obtaining additional credit facility.”

That would entail restructuring a loan amount of almost HKD2.07 billion outstanding, likely including a “change to the instalment loan repayment schedule by reducing the amounts repayable in 2023 and 2024, and amendment of the loan covenants,” stated the gaming services firm.

Macau Legend has not complied since 2021 with a covenant clause on the group’s minimum net assets undertaking of HKD5.50 billion, but it has received consecutive waivers from its lenders regarding that requirement.

On December 28 last year, the banks granted the firm a further waiver, up to December 31, 2023. “The management will apply for and expects the banks will continue to extend the loan covenant waiver or amend the loan covenants in the group’s favour,” stated the company.

As a result of the loan covenant waiver received in December, bank borrowings in the amount of nearly HKD2.02 billion “have been classified as non-current liabilities”.

Macau Legend had net current liabilities of just about HKD978.0 million as of December 31, 2022.

The firm said in its annual report that certain of its shareholders had agreed not to request for repayment until March 31, 2024, loans amounting in aggregate to HKD480.0 million.