GGRAsia – NagaCorp gets US$80mln loan from Chen trust to repay debt

NagaCorp gets US$80mln loan from Chen trust to repay debt

Oct 18, 2023 Newsdesk Latest News, Rest of Asia, Top of the deck

NagaCorp Ltd, operator of the NagaWorld complex (pictured), a casino resort monopoly in the Cambodian capital Phnom Penh, is to get a loan of “up to US$80 million” at 8.0-percent annual interest, from a trust controlled by the Chen family. The funds are to be used to address financial obligations linked to a series of senior notes due to mature next year.

“No guarantee or security will be given by the group for the loan,” NagaCorp said in a filing on Tuesday to the Hong Kong Stock Exchange.

The lender is ChenLipKeong Capital Ltd, a private limited company incorporated in the Cayman Islands. It is wholly-owned by The Sakai Trust, a discretionary family trust established by Chen Lip Keong as settlor for the benefit of himself and his family.

Mr Chen is the controlling shareholder and senior chief executive of NagaCorp.

The firm said in its Tuesday filing that “the sole purpose of the loan is for refinancing and/or discharging part of the outstanding 2024 notes upon their maturity.” The latter was a reference to two groups of 7.95-percent senior notes of an aggregate principal amount of US$550 million, maturing on July 6 2024. They were issued by NagaCorp in July 2020 and June 2021 respectively.

The company had already repurchased part of its 2024 notes last year, leaving around US$472.2-million outstanding.

NagaCorp “is of the view that the loan, together with the cash resources of the company, will be sufficient to discharge all of its financial obligations when the outstanding 2024 notes mature,” the firm said in Tuesday’s filing.

The company had said earlier this month it was “confident that it can discharge all of its financial obligations” regarding the July 2024 maturity deadline relating to its senior notes.

In June, Moody’s Investors Service downgraded to ‘B3’ from ‘B2’ the corporate family rating of NagaCorp. “The rating downgrade and negative outlook reflect NagaCorp’s lack of refinancing progress for its US$472 million U.S. dollar bond coming due in July 2024,” said at the time the ratings agency.

Morgan Stanley Asia Ltd stated in July that it expected NagaCorp to be “able to refinance” its bond issue maturing in July 2024. “As of the end of the first half of 2023, it [NagaCorp] had US$242 million cash, plus US$86 million half-on-half,” said the brokerage.

The loan announced on Tuesday “shall be funded by the internal resources” of the lender. ““Any outstanding principal amount of each advance of the loan shall be repaid by cash in full on or before the second anniversary of such advance,” stated the casino operator.

NagaCorp reported earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$215.4 million for the first nine months of 2023. The figure was up 17.4 percent from the prior-year period.