Following talks with the Macau government and a syndicate of lenders, Macau casino operator SJM Holdings Ltd has negotiated a HKD25-billion (US$3.2-billion) project loan for its Cotai project, Grand Lisboa Palace, part of which can be repaid after the firm’s current gaming concession expires in 2020.
The news was given on Thursday at a signing ceremony at its current flagship casino hotel Grand Lisboa, on Macau peninsula. Grand Lisboa Palace is not currently due to open until the first half of 2018.
SJM Holdings’ chief executive Ambrose So Shu Fai, said it had taken approximately two years to conclude the loan arrangement, due to legal technicalities involved, as well as the need to get the blessing of the Macau government.
“We needed the approval from the Macau government and it took time. And they allowed us to repay the [term] loan after our [current] concession is expired. So it was an important point that we had to settle with the Macau government,” said Mr So.
He was speaking on Thursday at the signing ceremony (pictured) for the syndicated loan arranged with 19 financial institutions.
The loan deal – via an SJM Holdings subsidiary – consists of a HKD15-billion term loan with final maturity in 2022 and a HKD10-billion revolving credit facility with final maturity in 2020, the casino operator announced. The facilities are guaranteed by SJM Holdings and carry interest at the Hong Kong Interbank Offered Rate (HIBOR) plus a variable margin.
Industrial and Commercial Bank of China (Macau) acted as the global mandated lead arranger, sole book runner, facility agent and security agent for the syndicated loan facilities. According to the casino operator, the facilities were oversubscribed by 1.2 times.
Mr So told reporters: “It [the HKD25 billion] is only for the civil construction, excluding interior decoration, land costs, preliminary expenses and opening expenses [for Grand Lisboa Palace]. But with everything included, it [the investment budget] is about HKD36 billion.”
The CEO had recently denied that the budget of Grand Lisboa Palace had swelled, saying merely that some cost items had not previously been mentioned.
“We’re trying to keep to that budget [HKD36 billion] as much as possible,” said Mr So in his Thursday comments. He added: “…we are the last one [operator] to complete [a Cotai resort], and we do not have too much pressure on cost escalation.” That was understood to be a reference to the fact Macau’s restrictions on importing construction labour have in the past created competition for building workers when several large projects were being built at the same time.
Macau’s casino gross gaming revenue (GGR) had experienced 26 months of contraction judged year-on-year up to July 31 last year. Mr So was asked in Thursday whether that downturn had caused difficulty in the negotiation of a loan for Grand Lisboa Palace.
He stated: “It was quite sticky at that time, because people were looking at the forecast of the revenue. At that time, people were not very optimistic about the future…and then we needed to revise the forecast. And they [the banks] felt comfortable with the forecast.”
Mr So also said that his firm has been trying to catch up “as quickly as possible” with the construction of Grand Lisboa Palace. A fire broke out at the site on March 17. It reportedly led to the evacuation of over 500 workers and damaged some construction materials.
“We’re trying to catch up as quickly as possible with the project so as not to delay it. But we didn’t see many losses from the fire. And the police are still investigating the cause of it,” Mr So said.
Aug 01, 2017Sponsored content Aristocrat Leisure Ltd strives to lead the gaming industry in creating combinations of innovative cabinets and games that really entertain. Its game and cabinet creations are designed to help operators cater to all types of players and gaming floor segments. “Our global teams of...
Aug 23, 2017The latest statistics of the manpower needs and wages of Macau’s gaming sector indicate that average earnings – excluding bonuses – of full-time employees – as measured in June 2017...
Aug 23, 2017
Aug 11, 2017Macau’s traditional gaming zone on downtown peninsula...
Jun 27, 2017Management at two major casino venues in the Philippine...
Nov 23, 2016Hong Kong-listed casino equipment supplier Paradise...
Oct 27, 2016As Studio City – the US$3.2-billion, 2015 addition to...
May 26, 2016Macau’s pacapio Chinese lottery game will celebrate its...
”The relocation to ICC Sydney had a positive impact on visitor numbers [to AGE 2017]… People like exhibition centres to be near the central business district of a city”
Chief executive of Gaming Technologies Association, organiser of the Australasian Gaming Expo