Authorities approve SJM Holdings refinance plan

The company is still waiting for the banks’ approval.
The company is still waiting for the banks’ approval.

The government of Macau has finally approved a revolving loan facility for HK$19bn (US$2.44bn) to refinance SJM’s existing financing.

Macau.- Morgan Stanley Asia Ltd has reported that authorities in Macau have approved SJM Holdings’ plan to refinance its existing bank loans with a new loan line of HKD19.0bn (US$2.44bn). Only the banks’ approval is now needed for it to be effective.

According to analysts Praveen Choudhary and Gareth Leung, the refinancing would provide the company with HK$6bn of additional liquidity as it draws down HK$13bn of previous loans. The new maturity date for the lines would be 2028. The effective interest rate would be the Hong Kong Interbank Offered Rate (HIBOR) plus 1.5 per cent to 2.25 per cent, terms similar to those on the present facility.

SJM Holdings revealed that it could access a HK$5bn (US$637m) loan from controlling shareholder STDM a day after posting a loss of HK$1.28bn (US$163.4m) for the first quarter of the year. Its outlook is uncertain since, according to analysts, the casino operator has only three months of liquidity at its current level of outgoings, mainly due to the expenses at the Grand Lisboa Palace casino resort complex.

Analysts previously stated that SJM Holdings’ operating expense was “likely to rise from the second half of 2022 amid the likely closure of some satellite casinos” as they believed SJM Holdings would have to bring gaming staff onto its own payroll. “This would shorten its liquidity runway even further, analysts noted.

The company has recently announced its purchase of the Oceanus property where the group currently operates the Oceanus casino. The HK$1.91bn (US$242.8m) acquisition is subject to the fulfilment of certain conditions, including approval of the transfer by independent shareholders at a general meeting scheduled for June 22.

The sum to be paid by SJM Holdings comprises HK$516m for the non-gaming area and HK$1.3m for the Oceanus casino area. The motivation for the purchase is the extension of the company’s concession contract with the Macau government, allowing it to meet a new property ownership requirement.

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