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Wynn Macau Amends $1.5B Credit Revolver

Wynn Macau, Ltd., the China arm of Wynn Resorts (NASDAQ:WYNN), announced in a filing with the Hong Kong Stock Exchange that lenders agreed to amendments on the gaming company’s $1.5 billion credit facility.

The announcement comes as the operator, along with 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.

The lenders 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 the filing.

Wynn Macau runs its eponymous venue and Wynn Palace in Macau. The final maturity of debt outstanding under the credit facility is September 2025. Lenders include a consortium of banks, led by the Macau branch of Bank of China.

Dividend Dilemma Remains

As was the case with so many gaming companies, Wynn suspended its cash dividend in 2020 to conserve cash amid the coronavirus pandemic.

And like so many of its rivals, the Las Vegas-based company hasn’t restored its payout. Wynn Resorts reports first-quarter results on Tuesday, and it’s possible the company offers some commentary on the dividend. But for now, the Macau unit appears unlikely to imminently restore the payout, because it will need creditors to agree to such a move.

“The company as guarantor may be subject to certain restrictions on payments of dividends or distributions to the company’s shareholders, unless certain financial criteria have been satisfied through the facility agreement,” according to the regulatory document.

Needing consent of creditors for dividends following amendments to credit facilities is common in the gaming industry. For example, Las Vegas Sands (NYSE:LVS) said last September it reworked a lending agreement with creditors. As part of that accord, it’s unlikely to restart a cash payout until at least late 2022.

Macau Rebound Still Pivotal for Wynn

In a standard operating environment, the SAR accounts for approximately two-thirds of the US parent’s earnings before interest, taxes, depreciation and amortization (EBITDA).

However, when “normal” returns in Macau is an increasingly murky proposition. While there is now clarity on Macau’s new gaming regulations, and it’s confirmed that no new operators will be entering the market, China’s ongoing zero tolerance policy on COVID-19 is hindering travel to the casino center.

Wynn’s roster of US venues is comprised of Wynn and Encore Las Vegas and Encore Boston Harbor. While business is brisk at those properties, particularly the Las Vegas pair, it’s not enough to offset weakness in Macau.


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