Melco Crown also made a deal
Bloomberg News reports that MGM China Holdings Ltd. has been approved for a multibillion-dollar loan amendment. The Macau unit of U.S.-based MGM Resorts International got the nod from two-thirds of its lenders to relax the terms of the HK$23.4 billion (US$3 billion) loan. The information came from unnamed sources, who said the deal was struck late in January.
In the original agreement, MGM China has a maximum total leverage of four times after the first anniversary of its new Cotai casino, which is due to open before the end of the year. MGM asked to raise the maximum total leverage to six times “from the second quarter of 2016 until the same period in 2017,” according to Bloomberg.
In November, Melco Crown Entertainment Ltd. also got the OK from lenders to amend an HK$10.85 billion (US$1.4 billion) loan for its $3.2 billion Hollywood-themed Studio City, which opened on Macau’s Cotai Strip in October. The operator got just 250 gaming tables in advance of opening, when it promised its creditors at least 400. According to CalvinAyre.com, that shortfall put the property “technically in default before it even opened.”
Melco Crown was able to negotiate “a covenant holiday” that will ease Studio City’s financial benchmarks this year, and also allow the operator to double the property’s total leverage to nine times its earnings for first-quarter 2017, CalvinAyre.com reported.
Gaming revenues in Macau plunged 34.3 percent in 2015, its lowest level since 2010, on the heels of an anti-corruption drive that began in mid-2014. The decline wasn’t helped by a softer Chinese economy. Monthly gaming revenues for December came in at MOP 18.34 billion (US$2.3 billion), a 21.2 percent year-on-year drop. Analysts and operators are mixed on the prospects for this year, but expect a moderate recovery, and a more robust comeback in 2017.
