Most recent quarter down 16 percent
Melco Crown Entertainment Ltd. and its lenders have agreed to amend certain covenants of its $1.4 billion facility, according to the Asia Gaming Brief. The amendment lowers the number of gaming tables Studio City must have in its first year; the original agreement required at least 400 tables to satisfy lenders who put HK$10.85 billion (US$1.4 billion) into the project on Macau’s Cotai Strip.
According to the original terms of the loan, Studio City, which opened in late October, would have had to amass that number of tables by the end of its first year or face immediate repayment of outstanding notes.
“The amendment to lower the required number of gaming tables is credit positive because it has alleviated the risk of covenant breach and immediate repayment of the $1.4 billion credit facilities,” said Moody’s Vice President and Senior Credit Officer Kaven Tsang.
“The amendments to the financial covenants and the rescheduling of the testing dates will also reduce the risk of noncompliance in the near-term, as the initial operation of the Studio City project will likely stay weak, given the challenging operating environment in Macau’s gaming sector,” Tsang wrote.
Moody’s negative outlook on the company run by James Packer and Lawrence Ho is unchanged. The Hollywood-themed, $3.2 billion casino opened during an unprecedented 17-month drought in the territory’s gaming industry.
On November 5 Melco Crown reported revenue of US$945.7 million for the three months leading up to September 30, down 16 percent year-on-year.
