- Melco gets amendment before deadline of Nov. 30 for 2018 loan
- Covenants allow operation with 250 tables instead of 400
A Melco Crown Entertainment Ltd. joint venture has received consent from banks to amend the terms on its HK$10.85 billion ($1.4 billion) loan for a Macau casino resort project that started operations last month amid the city’s worst gaming downturn on record.
The amendment of the loan, due January 2018, to Melco’s Studio City International Holdings Ltd. unit came before a Nov. 30 deadline and the approved covenants include changing the project’s opening date condition from 400 to 250 tables, consequential adjustments to the financial covenants, and rescheduling the commencement of financial covenant testing, according to a filing to the Securities and Exchange Commission on Wednesday.
The company, backed by billionaire Lawrence Ho, opened its $3.2 billion Studio City casino resort on Oct. 27, by offering a Batplane flight and a high-speed car chase. It is the latest test of Macau’s ability to attract visitors wanting to play on more than gaming tables and slot machines. The city’s casino revenue has plunged 36 percent this year, as a widening graft crackdown and an economic slowdown in China deter the country’s high rollers.
The amendment required consent from more than 50 percent of lenders, which include Bank of China Ltd. and Industrial & Commercial Bank of China Ltd.’s Macau units, people with knowledge of the matter said on Oct. 23. Studio city requested a so-called covenant holiday for 2016, meaning during that period its financial ratios don’t need to meet requirements imposed by the banks, the people said.
It’s also seeking other relaxations on its financial conditions after next year, including about doubling the maximum total leverage it’s allowed to as high as 9 times in the first quarter of 2017, the people said.
American depositary receipts of Melco slipped 0.6 percent to $16.35 as of 12:36 p.m. in New York.
Macau’s Chief Executive Fernando Chui said on Tuesday that the city’s casino revenue will be 200 billion patacas ($25 billion) next year, the lowest since 2010.
Since the opening, Studio City’s non-gaming facilities have performed well, and occupancy at the resort’s 1,600 hotel rooms was over 90 percent, Melco Chief Operating Officer Ying Tat Chan said on Nov. 5. The resort’s hotel is more than 85 percent booked for this month, and 70 percent booked for December, he added.