Macau casino operator SJM Holdings Ltd is to issue next Thursday (January 15), US$540-million gross in senior unsecured notes at 6.500-percent annual interest and due in 2031. That is according to a Friday filing with the Hong Kong bourse.
The issuance – via a wholly-owned subsidiary, SJM International Ltd – would “extend the maturity profile of the group’s indebtedness and enhance the group’s financial flexibility”, said SJM Holdings.
The casino operator stated it would seek a listing of the U.S.-dollar denominated notes on the Hong Kong Stock Exchange, and had received an eligibility letter from the bourse about the matter.
Interest on the notes is payable in arrears on January 15 and July 15 each year.
In the Friday filing, SJM Holdings stated that a subsidiary of the overall parent, Sociedade de Turismo e Diversões de Macau SA (STDM) had agreed to subscribe to a “certain amount” of the new notes, but didn’t elaborate. STDM is the controlling shareholder of SJM Holdings.
SJM Holdings stated its own board considered that the “connected subscription” was on “normal commercial terms or better”.
It added that the commercial terms for the notes, including interest rate, had been arrived at “after arm’s-length negotiation between the company and the connected subscriber, and the notes are not secured by the assets of the group.”
SJM Holdings further stated: “Therefore, the connected subscription is fully exempt from all disclosure, annual review, circular and shareholders’ approval requirements” in terms of Hong Kong listing rules.
On Monday, prior to any public statement on the pricing, Fitch Ratings Inc and Moody’s Ratings had respectively assigned a below-investment grade rating to the issuance of new U.S.-dollar senior, unsecured notes. The two rating agencies had both highlighted deleveraging challenges facing the casino operator. Moody’s said an upgrade of SJM Holdings’ ratings was “unlikely at present”.
SJM Holdings is concurrently repurchasing for cash its outstanding 4.500-percent senior notes due on January 27 this year. That exercise would be financed by the firm’s “internal funding”, as well as its issuance of the U.S.-dollar -denominated senior notes.
