US$254.8m loan will help SJM cope with cash burn
Moody’s Investors Service Inc. said the loan will boost SJM Holdings’ financial buffer by trimming its reliance on debt to cover its cash burn.
Macau.- Analysts at Moody’s Investors Service have issued a memo referring to the recent SJM Holdings Limited announcement regarding an unsecured term loan of HK$2bn (US$254.8m) granted by Sociedade de Turismo e Diversões de Macau, S.A. (STDM).
According to the agency, 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.”
The loan SJM received from its controlling shareholder is for a fixed period of six years from the date of drawdown with interest at 4 per cent per annum. Upon receiving the loan, STDM will facilitate SJM Holdings to pre-qualify for the Macau Government’s tender process for a 10-year gaming concession beginning in 2023.
Daisy Ho Chiu Fung, chairman of SJM Holdings, stated: “Both the Loan and the Rights Issue bolster the Company’s balance sheet position and liquidity and will place SJM Resorts in a strong position to participate in the tender for new Macau gaming concessions later this year.
“STDM’s strong backing of the Rights Issue and provision of the Loan demonstrates STDM’s and the Company’s confidence in the long-term growth potential of Macau notwithstanding the current difficult operating conditions.”
The company has recently reported a net loss of nearly HK$2.76bn (US$351.2m) for the first half of the year. The figure was up 88 per cent when compared to losses recorded in the first half of 2021 (HK$1.46bn).
Mass-market and VIP gaming segments both performed below expectations, resulting in a decline of 20.9 per cent in revenue to HK$4.13bn (US$525.9m). Adjusted EBITDA came in at HK$1.18bn in compared to a negative HK$510m recorded in the prior-year period.
Net gaming revenue was up 24.9 per cent year-on-year to HK$3.81bn while mass-market table GGR was down 21.7 per cent to HK$3.44bn. VIP gross revenue for the first half stood at HK$386.9m, down 54.8 per cent, while revenue from slot machines was down 6.3 per cent year-on-year to HK$248m.
