Standard & Poor’s (S&P) Global Ratings says a new note offering announced on Monday by NagaCorp Ltd will help the Cambodia casino operator improve its liquidity.
NagaCorp said in its Monday announcement that the net proceeds from its proposed note offer would be used to redeem “some or all” of the group’s outstanding notes due in 2021, with anything left over going toward general corporate purposes.
“This will extend the company’s debt maturity profile and improve its liquidity, which we assess as adequate,” said Standard & Poor’s in a Monday memo on the topic.
The ratings house gave a ‘B+’ long-term issue rating to note issue by NagaCorp.
The Hong Kong-listed operator has a long-life monopoly casino licence – recently extended to the year 2045 – for the area of the Cambodian capital Phnom Penh, where it runs the NagaWorld complex. Gaming at the site has been suspended since April 1 on the orders of the country’s government, as part of national measures to prevent the spread locally of the novel coronavirus responsible for Covid-19 infection.
Standard & Poor’s noted, with regard to the current lack of clarity on how long gaming operations at NagaWorld might be suspended: “We believe Naga[Corp]‘s strong cash balance of US$473 million as of March 31, 2020, can support its business for more than two years, even assuming zero revenue and minimum capital expenditure for 2020.”
The institution observed that as of March 31, NagaCorp’s capital structure “consisted only of the existing US$300-million senior unsecured notes at the holding company level”.
Standard & Poor’s said, referring secondly to an extension to the NagaWorld complex that opened in November 2017: “We expect Naga[Corp] to sustain its dominant market position in the Cambodian gaming industry and continue to ramp up its Naga 2 operations.”
The agency added: “We also expect Naga[Corp] to appropriately manage the refinancing or redemption of its unsecured notes over the next 12 months.”
In an April 2019 filing, NagaCorp had pledged to spend as much as US$3.5 billion on a fresh expansion of its NagaWorld site. Naga 3 would offer a mix of gaming and non-gaming, the company said at the time.
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Analysts at Morgan Stanley