Macau casino concessionaire Sands China Ltd says it has the financial capacity to support ongoing operations and development projects until “at least” the end of 2022 should COVID-19 pandemic conditions continue long-term.
Some details of the company’s current financial situation were made public on Monday as part of a registration statement filed with the US Securities and Exchange Commission, related to an exchange offer for US$1.95 billion in outstanding notes issued by the company last September. Sands China is looking to exchange the outstanding notes for new notes that have been registered under the Securities Act and don’t have any transfer restrictions.
According to the registration statement, Sands China drew down a combined US$201 million under its 2018 SCL Credit Facility on 15 March 2022, with the proceeds to be used for “general corporate purposes”. It also revealed the company has another US$1.54 billion available under the facility.
“Based on the current forecasts, we believe we are able to support continuing operations, complete the major construction projects that are underway and respond to the current COVID-19 pandemic challenges for at least 12 months from the end of the reporting period,” Sands China said, a reference to the FY21 period based on financials contained within the registration statement.
“We have taken various mitigating measures to manage through the current environment, including a cost and capital expenditure reduction program to minimize cash outflow for non-essential items.”
The forecast comes just days after investment bank Morgan Stanley said Macau’s concessionaires were losing a combined US$800 million per quarter and warned that at least one concessionaire, SJM, could use up all of its cash in just three months.
It also said Sands China and MGM China had around nine months (three quarters) worth of cash each, in line with the company’s own forecast this week.
Despite ongoing cash concerns, Sands China said in its registration statement, “We believe visitation [to Macau] will return to pre-pandemic levels and will continue to experience meaningful long-term growth. We believe this growth will be driven by a variety of factors, including the movement of Chinese citizens to urban centers in China, the continued growth of the Chinese outbound tourism market, the increased utilization of existing transportation infrastructure, the introduction of new transportation infrastructure and the continued increase in hotel room inventory in Macau and neighboring Hengqin Island.
“These factors should help increase the critical mass on Cotai and further drive Macau’s transformation into a leading leisure and business tourism hub in Asia.”