The promoter of the Studio City casino resort (pictured) in Macau says the property’s gross gaming revenues (GGR) in October and November during the latest fourth quarter increased by approximately 146 percent compared to the whole of third-quarter 2020. It gave the news on Monday as it revealed plans to issue an as-yet-unannounced amount of new senior notes.
Studio City Finance Ltd, a subsidiary of Studio City International Holdings Ltd, the controlling entity for the Studio City complex, said in a Monday filing that the group expected to achieve break-even in adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) “upon reaching approximately 30 percent to 35 percent” of the property’s historical GGR run-rate.
The company said however that it expected GGR in Macau to continue to be “negatively impacted” by “significant travel bans or restrictions, visa restrictions and quarantine and social distancing requirements” implemented in Macau as countermeasures against Covid-19.
“We have taken various mitigating measures to manage through the Covid-19 outbreak challenges, such as implementing a cost reduction programme to minimise cash outflow of non-essential items and rationalising our capital expenditure programme with deferrals and reductions which benefits our balance sheet,” it added.
In a separate filing, Studio City Finance announced the plan to conduct an international offering of senior notes. It also said it had initiated a conditional cash tender offer for “any and all” of its outstanding US$600-million senior unsecured notes due February 2024.
Studio City Finance said it plans to use the proceeds from the new notes, together with cash on hand if applicable, to fund the conditional tender offer and related costs; redeem in full any 2024 notes which remain outstanding following the tender offer; and use any remaining amount to partially fund the Studio City Phase 2 project and for general corporate purposes.
Melco Resorts and Entertainment Ltd controls Studio City International Holdings and runs the gaming operations at the Studio City property. Melco Resorts is controlled by gaming entrepreneur Lawrence Ho Yau Lung.
In its third-quarter earnings posted in November, Melco Resorts said the Covid-19 pandemic had “impacted the construction of the Studio City Phase 2 project,” an extension to the resort. The firm had added it was likely “additional time” would be needed to complete the construction.
In an August share exercise, Melco Resorts increased its stake in Studio City International to 54.7 percent from 54.1 percent.
In its latest filing, Studio City Finance said the group held cash and cash equivalents of US$98.6 million and restricted cash of US$0.1 million as of November 30. It also had a HKD233.0 million (US$30.1 million) revolving credit facility under a 2016 credit facility. As of that date, the group’s total principal amount of outstanding indebtedness was US$1.60 billion, it stated.