Melco Announces Extension of Maturity Date of Revolving Credit Facilities
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Insights
The extension of Melco Resorts & Entertainment Limited's revolving credit facility is a strategic financial maneuver that provides the company with increased financial flexibility. By extending the maturity date from 2025 to 2027, Melco effectively ensures that it has a longer runway to manage its cash flows and investments without the immediate pressure of refinancing. The maintenance of the original terms, such as facility size, pricing and financial covenants, suggests that the lenders have confidence in Melco's financial health and its ability to meet its obligations.
For investors, this extension might be interpreted as a positive signal regarding the company's liquidity and risk management. It's worth noting that the revolving credit facility is a important component of corporate finance, allowing companies to borrow and repay funds as needed, up to a certain limit. In the context of the hospitality and gaming industry, where Melco operates, such financial agility is particularly valuable given the capital-intensive nature of the business and potential volatility in revenue streams.
From a market perspective, the extension of the credit facility's maturity date may have implications for Melco's strategic initiatives. The added time before the credit needs to be repaid or refinanced can provide Melco with a stable platform for pursuing growth opportunities or weathering market downturns in the Asian and European regions where it operates integrated resort facilities. This move can be seen as a proactive step to mitigate risks associated with potential market fluctuations or economic downturns that could affect the tourism and gaming sectors.
Moreover, the unchanged terms of the credit facility signify that Melco has managed to retain its borrowing costs, which is a positive aspect for the company's profit margins. Investors and analysts will likely monitor how Melco allocates this capital, as strategic investments or debt reduction can lead to improved financial performance and potentially enhance shareholder value in the long term.
Legally, the extension of a credit facility and the execution of an amendment and restatement agreement are common practices in corporate finance law. The involvement of a subsidiary, MCO Nominee One, as the borrower, is a typical structure to isolate financial risks. The reference to the Secured Overnight Financing Rate (SOFR) as a benchmark for U.S. dollar loans reflects the industry's shift from the London Interbank Offered Rate (LIBOR) to more reliable interest rate benchmarks following regulatory guidance.
It is important for stakeholders to understand that such financial arrangements come with obligations and covenants that the company must adhere to, which can impact its operational flexibility. The payment of a customary fee to consenting lenders is also a standard practice to compensate for any changes in terms or conditions that might affect the lenders' interests. Stakeholders should consider the implications of these legal agreements on the company's future financial obligations and operational capabilities.
MACAU, April 08, 2024 (GLOBE NEWSWIRE) -- Melco Resorts & Entertainment Limited (Nasdaq: MLCO) (“Melco” or the “Company”), a developer, owner, and operator of integrated resort facilities in Asia and Europe, today announces that the maturity date of its HK
The 2020 Credit Facilities were originally established pursuant to a senior facilities agreement dated April 29, 2020, entered into between, among others, MCO Nominee One Limited (“MCO Nominee One”), a subsidiary of Melco, as borrower, and Bank of China Limited, Macau Branch as agent, and was amended and restated pursuant to an amendment and restatement agreement dated June 29, 2023, to include the term Secured Overnight Financing Rate as a benchmark rate for loans denominated in U.S. dollars (collectively, the “2020 Facility Agreement”).
The extension was made pursuant to a second amended and restated facility agreement dated April 8, 2024 (the “2024 Amendment and Restatement Agreement”). Key terms such as facility size, pricing and financial covenants remain unchanged.
In connection with the 2024 Amendment and Restatement Agreement, MCO Nominee One agreed to pay a customary fee to the consenting lenders.
Safe Harbor Statement
This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. The Company may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, but are not limited to, (i) pace of recovery from the impact of COVID-19 on our business, our industry and the global economy, (ii) risks associated with the amended Macau gaming law and its implementation by the Macau government, (iii) changes in the gaming market and visitations in Macau, (iv) capital and credit market volatility, (v) local and global economic conditions, (vi) our anticipated growth strategies, (vii) gaming authority and other governmental approvals and regulations, and (viii) our future business development, results of operations and financial condition. In some cases, forward-looking statements can be identified by words or phrases such as “may”, “will”, “expect”, “anticipate”, “target”, “aim”, “estimate”, “intend”, “plan”, “believe”, “potential”, “continue”, “is/are likely to” or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company undertakes no duty to update such information, except as required under applicable law.
For investment community, please contact:
Jeanny Kim
Senior Vice President, Group Treasurer
Tel: +852 2598 3698
Email: jeannykim@melco-resorts.com
For media enquiries, please contact:
Chimmy Leung
Executive Director, Corporate Communications
Tel: +852 3151 3765
Email: chimmyleung@melco-resorts.com
FAQ
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