Macau’s gambling scene has been in a rut this year, with revenue for virtually all of the operators remaining flat or seeing only mediocre gains. Wynn Macau, the Asia-based arm of Wynn Resorts, isn’t outside that circle, either, and is looking for a boost from investors. Wynn Macau has submitted a notice to the Hong Kong Stock Exchange that it has placed $1 billion in senior notes.
Wynn Resorts saw a $3.5-million loss in the third quarter, thanks to VIPs. The notes the company is offering are at 5.125% and will come due in 2029. If all goes well, Wynn Macau will have netted $991.3 million from the recently-conducted campaign.
In its filing, Wynn Macau stated, “The company conducted an offering of the notes to professional investors on December 10. [Wynn Macau] intends to use the net proceeds from the proposed offering to facilitate the repayment of a portion of the amounts outstanding under the Wynn Macau Ltd credit facilities, and for general corporate purposes.”
The sales event had been presented before the exchange on December 9, but specifics, including principal, conditions and other details, had not been laid out. Today’s filing was meant to clear the air and provide the missing pieces.
The company added, “The board believes that there would be significant benefit to the company in effecting the proposed issuance and using the net proceeds for the intended purpose as it would lead to a reduction in the secured indebtedness of the group.”
In just over two years, Wynn Macau, as will all other casino operators in Macau, will be looking for a new concession in the gambling city. Because of the timing of the offer and the expiration, the senior notes carry a caveat that gives purchasers the ability to require the company to buy back the notes, under certain circumstances, in part or in full for cash “equal to 100-percent of the principal amount… plus accrued and unpaid interest, if any, to but excluding the date of repurchase.”
Wynn has previously stated that it expects revenue to jump by 22% within two years. However, this might be a difficult goal to achieve. According to a report by Bloomberg Intelligence, Macau’s gaming revenue is shifting considerably. While a 14% increase was seen last year, 2019 could see a 3% drop. 2020 may not be any better, registering just a 3% increase by the end of the year. This would essentially bring the city only up to the 2018 year-end levels.
Asserts analyst David Bonnet, “All of the juice has been squeezed out of the orange. Macau is starting to resemble more mature competitive markets such as Las Vegas and Atlantic City.”