Las Vegas Sands, а world leader in developing and operating international, world-class integrated resorts, has issued a loan to its Chinese arm. As per the agreement, Sands China will receive a $1 billion subordinated unsecured term loan.
Sands China Considers the Terms Fair
The loan was issued on July 11, 2022 and Sands China will have to repay it before July 11, 2028. After two years have passed, the Chinese operator will be able to choose to either pay interest at 5% a year or payment-in-kind interest at 6% a year. Sands China is also allowed to pre-pay a part of the loan or its entirety without having to pay any penalties.
In addition, Sands China’s obligations will be subordinated to all third-party unsecured indebtedness and other obligations of the group from time to time. This includes all senior notes that have been issued by Sands China, as well as the 2018 SCL Credit Facility.
Sands China’s board of directors released a statement on the matter. The company confirmed that it is satisfied by the loan’s terms and considers them to be reasonable. Therefore, it believes that the loan will bring value both to the company and to its shareholders.
This agreement is a testament to the enduring relationship the subsidiary has with Las Vegas Sands. In addition, it shows that both companies trust the Macau market and believe that it will steadily recover from the devastating effects of the pandemic. Sands China noted that the loan will further bolster the company’s balance sheet position and liquidity.
The Money Will Help Sand China Deal with the Pandemic
Sands China will use the funds to support its workers and mitigate the damages caused by the COVID-19 outbreak. Furthermore, the money will help the Chinese arm continue its operations uninterrupted, despite the difficulties.
Right now, Macau’s gambling market is struggling because of the pandemic’s impact. At first, Macau did its best to keep the casinos working, albeit at a limited capacity. However, the special administrative region was eventually forced to announce a week-long lockdown.
Sands China’s shares immediately experienced a 9% decline. This mirrors the overall struggles of concessionaires in Macau. According to official data, gross gaming revenues from the region have been steadily declining for the past few months.
Luckily, experts believe that the concessionaires have enough reserves to stay in business until the situation calms down. Wynn Resorts, for example, also provided its Macau arm with a loan. However, analysts predict that the region will not recover earlier than 2024.