Hong Kong-listed Melco International Development Ltd, the parent of United States-listed casino operator Melco Resorts and Entertainment Ltd, said in a Thursday filing it had suspended its “semi-annual dividend” programme due to “current conditions”.
Earlier Melco Resorts had stated in its first-quarter results it would stop for the time being issuing a quarterly dividend. Later in an an earnings call, Melco Resorts clarified that would conserve about US$80 million in capital per quarter.
Melco International held a 56.54 percent stake in Melco Resorts as of December 31, according to the parent’s annual report. Melco Resorts invests in and manages gaming operations in Macau, the Philippines and Cyprus.
Melco International noted Melco Resorts’ own dividend decision had been taken “in light of the Covid-19 pandemic,” and was in order to be able to “continue investing in its business” at a time of constrained operating revenue.
Melco Resorts had reported a near 82-percent dip in adjusted earnings before interest, taxation, depreciation and amortisation for the first quarter.
Melco International said in its own filing that its twice-yearly dividend policy as set out in 2014, had enabled it to pay each year, approximately 20 percent of the company’s annual consolidated net income as deemed attributable to its shareholders. That was “subject to the company’s capacity to pay” relative to “accumulated and future earnings, liquidity position,” and “future commitments”.
The decision to suspend the parent’s payouts had been taken after “assessing the financial and cash flow position of the group, and having taken into account the suspension of Melco Resorts’ dividend programme”.
Melco International said it would evaluate the position “as the operating environment evolves”.
Earlier Lawrence Ho Yau Lung, the chairman and chief executive of both firms, had stated on a conference call that in terms of the operating outlook for Melco Resorts, “short term continues to be Armageddon, mid term is grim, long term is great; and it really depends on when the borders start opening up”.
Currently none of Macau’s borders are closed, but a raft of restrictions against the spread of Covid-19 mean that in practice the city has been receiving very few tourists for some weeks.
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Macau’s total VIP gross gaming revenue in the first quarter of 2021