No rating impact from SJM satellite casino acquisitions and closures, Fitch says
The ratings agency expects the impact will be “manageable.”
Macau.- Fitch Ratings has forecast that SJM Holdings’ plan to acquire the properties of Casino L’Arc Macau and Casino Ponte 16 and to discontinue remaining satellite casinos is unlikely to significantly impact its credit profile.
Earlier this month, SJM announced that it intends to acquire the properties where Casino L’Arc Macau and Casino Ponte 16 are located and continue the casino operations as self-promoted casinos. It will discontinue its remaining seven satellite casinos upon expiry of their service agreements on December 31, which marks the end of the three-year transition period for satellite casinos under the previous profit-sharing model.
Fitch believes the potential debt-funded acquisitions could have a “moderate negative impact on SJM’s leverage profile,” as the additional debt would be partially offset by additional EBITDA from the casinos at the two properties.
“we expect the impact to be manageable and we continue to expect SJM’s EBITDA net leverage to decline to below 5x, our negative rating sensitivity, in 2027,” it said.
Fitch estimates that SJM may reallocate around 300 tables and 4,000 staff from the satellite casinos to its self-operated casinos, such as Grand Lisboa Palace, which has the capacity for over 300 tables compared with about 210 in operation.
