Studio City Co Ltd has announced the pricing of some rejigged financing arrangements for the Studio City casino project (pictured) in Macau’s Cotai district.
Studio City Co – a British Virgin Islands-registered firm and subsidiary of Asian casino developer Melco Crown Entertainment Ltd – is the borrower under a US$1.4-billion senior secured facility for construction of the property, a venue that launched on October 27 last year. Melco Crown is the 60-percent owner of Studio City.
The new senior secured notes toward repayment of that amount are due in 2019 and 2021 respectively. The intention to launch the international offering of the new notes had been announced by Studio City Co on November 15.
The 2019 notes have a value of US$350 million at 5.875 percent interest; while the 2021 notes are valued at US$850 million, at 7.25 percent interest, said Studio City Co on Tuesday.
Both sets of notes are priced at 100 percent.
Studio City Co intends to use the net proceeds from the offering, together with cash on hand, toward the repayment in full of an approximately HKD10.86-billion (US$1.4-billion) senior secured term loan and revolving facilities agreement, dated January 28, 2013.
The new notes are to be guaranteed by Studio City Investments Ltd and all of the subsidiaries of Studio City Co.
Melco Crown itself is not a guarantor of the notes, according to Tuesday’s Nasdaq filing. New Cotai LLC owns 40 percent of the Studio City project.
In-principle approval had been received for the listing of the notes on the Singapore Exchange, added Melco Crown’s Tuesday filing to Nasdaq.
According to the Tuesday announcement, Studio City Co has also reached agreement with Bank of China Ltd, Macau Branch and others, to amend, restate and extend its existing senior secured credit facilities totalling HKD234 million, consisting of: a HKD233-million revolving credit facility; and a HKD1-million term loan facility.
Studio City Finance Ltd – a company 60-percent owned by Melco Crown – had said in a November 15 Nasdaq filing by Melco Crown; announcing the proposed rejigging of the Studio City project financing: “While Studio City remains in its initial ramp-up period, and has only been in operation for approximately one year, the performance of the property has developed more slowly than initially expected.”
Studio City Finance had added: “In addition, economic and political factors and localised factors (such as ongoing construction works around the Studio City property) have had an effect.”
It further stated: “Management is focused on its efforts to drive performance, introducing special programmes to promote growth and optimisation of the property and its operations, including the opening of a VIP rolling chip area operating up to 33 VIP tables allocated to Melco Crown Macau by the Macau government.”
A May 31, 2013 filing to the Singapore Exchange said that on January 28 that year Studio City Finance had sealed a Studio City project facility amounting to approximately HKD10.86 billion, made up of a five-year, HKD10.08-billion delayed-draw term loan and a HKD775.42-million revolving credit facility.
The pricing on that deal was the Hong Kong Interbank Offered Rate (HIBOR) plus a margin of 4.50 percent per annum “until the last day of the second full fiscal quarter after the opening date of the Studio City project”.
Subsequently, interest on the 2013 facility accrued at HIBOR plus a margin ranging from 3.75 percent to 4.50 percent per annum, “depending on the total leverage ratio of Studio City Co Ltd and its subsidiaries”.
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Lionel Leong Vai Tac
Macau’s Secretary for Economy and Finance