SJM Resorts to increase share capital to US$618.4m

The company will increase its share capital to be able to qualify for Macau’s new gaming concession tender.

Macau.- With Macau casino operators working on their proposals for the upcoming gaming concession retender, SJM Resorts has announced that it has increased its share capital by nearly 1,567 per cent, to MOP5.0bn (US$618.4m) to be able to qualify.

Casino operators must have a registered capital of at least MOP5bn while their licences are valid. SJM Holdings’ parent company also said that it would increase its “Class B” stake from 10 per cent to 15 per cent of SJM Resorts’ issued share capital as Macau’s revised gaming law requires at least 15 per cent of gaming concessionaires’ share capital to be held by “managers” who are permanent residents of Macau.

Currently, SJM Resorts has a registered capital of MOP300m, consisting of 2,700,000 Class A shares (90 per cent of the issued share capital) and 300,000 Class B shares (10 per cent) of MOP100 each.

In accordance with the applicable law, the new Class B shares will be issued to the managing director of SJM Resorts at par payable in cash in order to maintain that director’s shareholding in SJM Resorts.

SJM Holdings Limited recently announced through a company filing that Sociedade de Turismo e Diversões de Macau, S.A. (STDM), its controlling shareholder, had agreed to extend an unsecured term loan of HK$2bn (US$254.8m). The loan is for a fixed period of six years from the date of drawdown with interest at 4 per cent per annum.

Analysts at Moody’s Investors Service said the loan will help the casino operator cope with any cash burn for at least the next 18 months. The rating agency estimated that by the end of September, SJM’s sources of liquidity would have increased by at least 45 per cent from the end of June.

In currency terms, this would be between HK$9bn and HK$9.5bn, including about HK$4bn available for withdrawals under the revolving credit facility, compared with HK$6.2bn of liquidity at the end of June.

It said: “The around HK$3bn in additional equity will boost SJM Holdings’ financial buffer by trimming its reliance on debt to cover its cash burn.”