Macau casino operator Wynn Macau Ltd had daily operating costs of approximately HKD15.5 million (US$2.0 million) during July, compared to HKD23.0 million per day during the fourth quarter of 2019. The company said it expected “to achieve break-even” adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) “upon reaching approximately 40 percent” of the group’s “historical gross gaming revenues run-rate.”
The figures were disclosed in a Tuesday filing to the Hong Kong Stock Exchange announcing a proposed offering of senior notes to professional investors.
Although Wynn Macau Ltd did not disclose the aggregate principal amount of the freshly-announced note exercise, Moody’s Investors Service Inc said in a Tuesday memo it had assigned a “B1” rating to Wynn Macau Ltd’s proposed US$600-million senior unsecured notes due 2028 and US$250 million add-on to the company’s existing notes due 2026.
“The refinancing is credit positive, enabling the company to improve future funding flexibility by reducing the secured debt in its capital structure,” stated the ratings agency.
Wynn Macau Ltd, a unit of U.S.-based Wynn Resorts Ltd, runs the Wynn Macau complex on the city’s peninsula and the Wynn Palace casino resort (pictured) in the Cotai district. Casino operators in Macau and elsewhere have been cutting their costs amid the negative impact from Covid-19 and related travel restrictions to stem the pandemic.
The Macau unit said the note offering involved the issuance of new senior notes and of additional notes to an exercise announced two months ago. In June, Wynn Macau Ltd said it was issuing US$750-million in senior unsecured notes as part of its efforts to weather the impact of Covid-19.
As at July 31, Wynn Macau Ltd had cash and cash equivalents of HKD17.7 billion and revolver capacity of HKD1.4 billion, according to the latest filing. The casino operator said its board believed that there would be “significant benefit” to the company from the proposed issuance of notes.
The group stated: “The company intends to use the net proceeds from the proposed offering to facilitate the repayment of a portion of the amounts outstanding under the term loan of the Wynn Macau credit facilities.”
It added: “Using the net proceeds for the intended purpose … would extend the maturity profile of the group’s indebtedness and reduce the group’s secured indebtedness.”
Wynn Macau Ltd reported earlier this month a nearly US$351.6-million net loss in the second quarter of 2020, compared to a US$168.6-million profit in the equivalent quarter a year earlier.
The group’s chief executive Matt Maddox said on a conference call with analysts following the second-quarter results that Wynn Macau Ltd had been able to cut non-labour operating expenses, so that it had experienced a “gradually improving… daily EBITDA burn of US$1.25 million to US$2 million”.
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”Our own consensus is that any newcomers to this [junket] sector should be corporatised, and should be financially sound and able to commit a higher guarantee deposit”
Kwok Chi Chung
President of junket trade body, the Macau Association of Gaming and Entertainment Promoters