Covid-19 countermeasures and economic uncertainty surrounding casino operations in the Philippines have led Fitch to downgrade Universal Entertainment.<\/p>\n\n\n\n\n\n\n\n
Japan.- Fitch Ratings has revised its outlook<\/strong> for the gaming company Universal Entertainment Corp<\/strong>, lowering it from B to CCC+<\/strong>, which means default is a real possibility for the group.<\/p>\n\n\n\n Fitch said that unless Universal Entertainment saw significant improvement in the second half of the year 2021, it may have insufficient liquidity to meet a repayment of nearly JPY14bn (US$118m) senior secured notes (SSN) <\/strong>due in December 2021.<\/p>\n\n\n\n The credit ratings provider was also influenced to lower <\/strong>Universal Entertainment rating due to its increased earnings and cash flow volatility<\/strong>, which has been amplified by the Covid-19 pandemic.<\/p>\n\n\n\n The biggest complications Universal Entertainment faces are ongoing travel restrictions and further lockdowns <\/strong>which, according to Fitch, could lead to further cash burn and deteriorating liquidity<\/p>\n\n\n\n Fitch Ratings stated: “We are monitoring UEC’s liquidity closely before the USD118 million<\/strong> SSN mature in December.”<\/p>\n\n\n\n Universal Entertainment<\/a> reporting net sales down 64 per cent year-on-year for the first quarter at JPY14.7bn (US$134.1m)<\/strong>.<\/p>\n\n\n\n The Amusement Equipment business<\/strong> saw sales fall to 12,708 units compared with 52,631 units in the same period of 2020<\/strong>. Its net sales were JPY5.38bn, down 78.2 per cent year-on-year.<\/p>\n\n\n\n Universal reported a net loss of JPY5.2bn (US$48m)<\/strong>, which is attributed to restrictions at Okada Manila.<\/p>\n\n\n\n The Okada Manila Integrated Resort had been operating limited to a capacity of 30 per cent<\/strong> but has been closed since March<\/strong>.<\/p>\n\n\n\n A week ago, the Philippines\u2019 president announced that Metro Manila<\/a> was moving to general community quarantine until May 31<\/strong>. However, there’s no word yet on casinos reopening.<\/p>\n\n\n\n