Melco Resorts Announces Second $500M Senior Note Offering, Casino Giant Raising $1B in Capital

Posted on: August 4, 2020, 11:26h. 

Last updated on: August 4, 2020, 12:39h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

Melco Resorts, one of the six licensed casino operators in Macau, has unveiled its intentions to raise an additional $500 million through the issuance of senior notes.

Melco Resorts Macau casino resort
Lawrence Ho, the billionaire founder and CEO of Melco Resorts, stands in front of the company’s Morpheus resort in China’s Macau. (Image: Philip Fong/Getty)

In a press release and filings made with the US Securities and Exchange Commission, the casino operator based in Hong Kong said the supplementary notes will come with the same 5.75 percent interest rate, and also be due in 2028.

The net proceeds from the international offering will be used for corporate purposes, according to a statement from Melco.

The announcement follows a similar one made in July, which consisted of the first $500 million note batch.

Melco Resorts owns and operates its flagship casino resort City of Dreams in China’s Macau, as well as Altira Macau and eight Mocha Clubs throughout the region. The company also has a controlling stake in Studio City, another integrated resort on the Cotai Strip.

Melco additionally owns and operates City of Dreams Manila in the Philippines, and plans to open City of Dreams Mediterranean in Cyprus next year.

Revenue Demand

Though Macau casinos have remained open during the COVID-19 pandemic, the exception being a 15-day shutdown in February, business has been minimal due to strict entry procedures in and out of the Special Administrative Region. Gross gaming revenue (GGR) in the world’s richest gaming hub January through July is down nearly 80 percent.

Melco has subsequently reduced its overhead, dropping its daily operating cost in Macau from $3 million prior to the coronavirus, to $2.2 million in May.

Melco Resorts CEO Lawrence Ho remains confident that the region’s gaming industry will bounce back. The billionaire last month personally purchased $60 million worth of senior notes offered by Studio City International Holdings Limited, which are due in 2025 at a six percent interest rate.

Melco has publicly revealed its plans to invest $500 million in new Class A ordinary shares offered by Studio City. Melco already owns a 54.3 percent stake in Studio City and controlled a 21.4 percent market share in Macau during the first three months of 2020.

“We remain bullish on Melco’s long-term growth prospects,” Ho said in May. “Macau remains the most attractive integrated resort market in the world, benefiting from the expanding Chinese middle class and infrastructure development in the Greater Bay Area.”

Earnings Trickle In 

Melco Resorts is expected to reveal its second quarter earnings report in the coming days. The company has yet to confirm an exact date.

Among the financial analysts who have offered earnings predictions for the three-month period, the consensus forecast calls for a loss of $0.85 per share and revenue of $187.3 million. That would be a year-over-year revenue decline of 87 percent.

While Melco’s Macau gaming properties are bringing in some revenue, its integrated resort in the Philippines remains closed. This week, the Filipino government announced a stricter lockdown on the capital city, which will keep casinos closed until at least August 18.