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In Macau and casino operator SJM Holdings Limited has reportedly announced that it is to issue convertible five-year bonds worth slightly over $242.82 million so as to be able to buy the Casino Oceanus at Jai Alai facility from its Sociedade de Turismo e Diversoes de Macau (STDM) SA parent.
According to a report from Inside Asian Gaming, the firm already behind the enclave’s iconic Casino Grand Lisboa and even larger Grand Lisboa Palace facility revealed that the coming bonds are to feature an annual interest rate of 2% and, if fully exercised, would see STDM SA’s stake in its own business rise by 3.4% to stand at 58.1%.
Rules revision:
The move from SJM Holdings Limited reportedly comes as the government of Macau is preparing to ratify new legislation that could potentially require casino operators to truly own any properties in which they offer gambling entertainment. The source speculated that the purchase may moreover be an attempt by the Hong Kong-listed firm to shore up its reputation as it prepares to bid for a new ten-year local gaming concession.
Subsequent surrender:
In a surprising move and SJM Holdings Limited reportedly also disclosed that it had inked a letter of commitment that will see it return its gambling license for the 146,130 sq ft casino within the Casino Oceanus at Jai Alai venue to the government of Macau once its existing satellite arrangement with STDM SA expires on December 31. However, Inside Asian Gaming explained that such a move would not consequently preclude the firm from re-acquiring the right to offer gaming entertainment within the downtown property should it be granted a new concession.
Allied apprehension:
For its part and GGRAsia used its own report to divulge that American investment bank JPMorgan Chase and Company yesterday expressed concern over the coming deal due to the widespread belief that SJM Holdings Limited only holds ready liquidity for approximately three months. This source noted that the operator nonetheless has the ability to secure a loan of up to $637 million from STDM SA should it be faced with extreme operational difficulties.
Cash consideration:
The non-gaming amenities within the Casino Oceanus at Jai Alai development, which include two restaurants and a bar, are reportedly thought to be worth something like $65.74 million while the venue’s casino is believed to be valued at roughly $177.08 million. Nevertheless, JPMorgan Chase and Company analysts Livy Lyu, Amanda Cheng and DS Kim purportedly wrote that they ‘do not like the timing’ of the purchase as SJM Holdings Limited is facing ‘a liquidity strain with very limited runway.’
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