SJM Holdings may pay US$38.2m for two self-promoted casinos

SJM has already announced that it will acquire the Oceanus.
SJM has already announced that it will acquire the Oceanus.

It’s expected that SJM Holdings Ltd may buy Casino Eastern and Casino Taipa to satisfy new gaming laws.

Macau.- Having already announced its acquisition of Oceanus, SJM Holdings is expected to acquire other self-promoted casinos in Macau – and it may need to spend HKD300m (US$38.2m) to do that.

According to Daiwa Capital Markets Hong Kong Ltd, that’s the price the casino operator could need to spend HKD300m (US$38.2m) to acquire the Casino Eastern beside the Artyzen Grand Lapa Macau hotel, and Casino Taipa inside the Regency Art Hotel in Taipa.

However, analysts at JP Morgan Securities suggested in a note that Casino Eastern and Casino Taipa could cease operations as they failed to generate significant profits in recent years, even before the Covid-19 pandemic.

For Oceanus, SJM has said it will pay 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.

SJM Holdings said that while negotiating to extend its concession contract to December 31, 2021, it agreed to provide a letter of commitment to Macau authorities to ensure the restoration of public control of the Oceanus Gaming Area at the end of the concession period.

Under current gaming laws, franchisees must automatically return their casinos and related equipment to the Macau government without any encumbrances or limitations at the end of the franchise period.

Authorities approve SJM Holdings refinance plan

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.

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