Fitch Ratings has made the forecast in a report on casino operator SJM Holdings.
Macau.- Fitch Ratings has forecast SJM Holding’s new Cotai resort Grand Lisboa Palace will generate EBITDA of HK$2bn (US$258m) by 2022 and HK$3.5bn (US$451m) by 2023.
The opening of the HK$39bn (US$5bn) resort slated for the first quarter of the year, will help SJM as it faces the possibility of lagging behind other casino operators in Macau in the recovery from the impact of Covid-19, the ratings agency said.
Fitch has given SJM Holdings an IDR default rating of BB+ with a negative outlook.
It said the rating reflected SJM’s “conservative financial position, with well-established operations in Macau” but also its “weaker-than-peer market position” in the competitive market.
The agency believes that the lower exposure of this firm’s casinos in the Cotai area, where most of the slight increase in foreign visitation has been centred, suggests “the risk of a recovery that is slower than our expectations, which may result from extended travel restrictions.”
The opening of Grand Lisboa Palace would help correct that.
It said: “We forecast Grand Lisboa Palace will have EBITDA of HK$2bn (US$258m) with 330 tables by 2022, and HK$3.5bn with 380 tables by 2023, which will be partially offset by slightly lower EBITDA at its existing properties due to table reallocation and business diverted to Grand Lisboa Palace.”
Meanwhile, a wholly-owned subsidiary of SJM Holdings, Champion Path Holdings, is to conduct an international offering of new senior notes.
The company said in a filing that the amount and pricing of the notes had not determined been determined but will be defined by a book-building exercise to be conducted by the joint global coordinators and joint book-runners.
If the firm reaches an agreement with a potential subscriber and the notes are issued, about 90 per cent of the net proceeds will be used to refinance current debt facilities.