Wynn Resorts Loans Macau Unit $500M

Posted on: June 14, 2022, 11:23h. 

Last updated on: June 14, 2022, 03:10h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Wynn Resorts (NASDAQ:WYNN) is extending a $500 million credit facility to its Wynn Macau arm to shore up its finances.

Wynn Macau
Wynn Palace in Macau, seen above. The operator’s US-based parent is extending it a $500 million credit revolver. (Image: YouTube)

According to a regulatory filing with the Hong Kong Stock Exchange, the credit revolver carries a two-year term and an annual interest rate of 4%.

The agreement highlights both Wynn Resorts and the company’s (Wynn Macau) confidence in the long-term growth potential of Macau and the availability of the facility further bolsters the company’s already strong financial position,” said the operators in the filing.

The announcement comes as Wynn Macau and other Macau concessionaires face ongoing obstacles in the world’s largest casino center. In April, operators in the special administrative region (SAR) posted gross gaming revenue (GGR) of just $331.2 million — the worst monthly tally since September 2020.

Wynn is providing its Macau arm with the credit facility to support “potential future working capital and other funding needs, if necessary.” As of June 14, Las Vegas-based Wynn Resorts owns approximately 72% of the issued share capital of Wynn Macau.

Follows Another Financial Move

Wynn Resorts extending the credit revolved to Wynn Macau comes about a month after the latter amended a $1.5 billion credit facility.

In May, Wynn Macau creditors, including Bank of China, “agreed to (i) waive certain financial covenants in the Facility Agreement in respect of the relevant periods ending on the following applicable test dates (a) 30 June 2022; (b) 30 September 2022; (c) 31 December 2022; and (d) 31 March 2023; and (ii) provide for a floor on the interest rate margin of 2.625% per annum through 30 June 2023,” according to a regulatory filing.

That debt matures in September 2025. The financial moves by Wynn Macau arrive as concessionaires in the special administrative region (SAR) are packing on debt to ride a still-turbulent operating environment caused largely by China’s restrictive travel policies in the wake of the coronavirus pandemic.

Morgan Stanley sees the combined debt of the six Macau casino operators potentially swelling to $25 billion by the end of this year — up from a prior forecast of $23 billion. It’s possible that the figure could stretch to $27 billion if travel restrictions remain in place well into the back half of 2022.

Strong Survivorability Prospects

Owing to slack tourism and high cash burn rates, some Macau concessionaires faced questions about their ability to survive. Fortunately for Wynn, its Macau unit isn’t in that dubious category.

In its most recent update, Morgan Stanley says the need to borrow additional capital over the near term is dwindling for Galaxy and Wynn Macau, with each possessing enough cash to survive at least three years at current burn rates.

Wynn’s Macau integrated resorts are its namesake venue and Wynn Palace.