The capital liquidity of Macau casino operator SJM Holdings Ltd will “remain weak” pending the securing of HKD19-billion (US$2.43-billion) in long-term banking facilities, as the maturity on its current debt balance of HKD13.3 billion had only been extended by a year, says Moody’s Investors Service Inc.
SJM Holdings’ plan to execute new bank facilities to refinance its existing facilities had been “delayed since the middle of 2021 because of pending regulatory approvals,” noted Moody’s in some issuer comment on Tuesday.
The casino group’s cash holdings of HKD3.3 billion and revolver availability of HKD1.3 billion at the end of 2021 “will only be sufficient to cover expected cash needs of SJM through 2022, including the moderate amounts of extension fees and repayment to a handful of lenders that did not consent to the maturity extension,” said the Moody’s note by Sean Hwang, Gloria Tsuen, and Kuen Woo Park.
SJM Holdings – which on Monday reported a HKD4.14-billion loss for 2021 – has spent HKD39 billion on its first Cotai resort, Grand Lisboa Palace (pictured). It opened on July 30, into a market disrupted by the Covid-19 pandemic.
SJM Holdings had mentioned the short-term extension on maturity of its current debt – to the end of February 2023 – in its full-year 2021 results, adding it expected to complete the longer-term financing by the second quarter this year.
Brokerage Sanford C. Bernstein Ltd said in a Monday note that the casino group’s management had indicated that about “95 percent of lenders” had agreed to that temporary arrangement, and that the company “will likely secure new financing before the extended due date”.
Sanford Bernstein analyst Vitaly Umansky gave some colour on the reason for the delay: “The current hurdle for the refinancing is that the Macau government wants changes around gaming area definitions in the loan agreements – which requires government approval before refinancing.”
Though the analyst added SJM Holdings’ management was “confident in the government process and indicated that the refinancing will be finalised ‘very soon’.”
GGRAsia has approached SJM Holdings, and Macau’s casino regulator, the Gaming Inspection and Coordination Bureau, seeking clarification on the “gaming area definitions” mentioned by Sanford Bernstein. We had not received replies from either organisation, by the time this story went online.
Moody’s corporate family rating on SJM Holdings is ‘Ba2’, with the outlook under review for possible downgrade.
Champion Path Holdings Ltd, an SJM Holdings subsidiary that has issued U.S.-dollar denominated senior notes on behalf of the group, has a ‘Ba3’ rating from Moody’s, with the outlook also under review for possible downgrade.
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