The Japanese manufacturer of casino products Universal Entertainment fired its CEO Kazuo Okada, but this was not enough for shareholders and sponsors to regain confidence in the company. In recent years the company has tried to overcome its financial problems but has not yet managed to obtain healthy balance sheets.
The company has made provisioning gains but is accumulating $ 600 million senior notes, the terms of which it expected to fully renegotiate. Now, the operator is trying to put other ways to shore up its critical finances after the denial of a request to restructure its debt.
The parent company of Tiger Resort Leisure and Entertainment with operations in Manila, announced in september its intention to extend the term of the promissory notes for three years, scheduled for december 11, 2021. Likewise, to maintain the current level of the interest rate 8.5%.
But the company failed to convince all banknote holders with the proposal and the request was only partially approved. 80.3% of the promissory notes ($ 482 million) will be exchanged by Universal for a new issuance maturing through december 11, 2024.
This requires the approval of 75%, and the remaining $ 118 million will be exchanged when the notes reach their current value. However, this will not be enough and the company will have to figure out how to make up the difference.
With the new exchange offer, Universal will be able to have a certain margin of operation and will be able to delay a few years the payment of most of the notes. But the company is still trying to get additional fresh money and already announced a new offering of notes last week for $ 135 million.
This year things improved for Universal as operations during the first half of the year resulted in a profit of $ 120.1 million, thanks to increased sales in Japan. Although in other countries they have not been so good. This is the case for Okada Manila where net sales fell by half ($ 152.6 million) and reported operating losses were $ 49.9 million.
The property has been hit hard by closures triggered by the cotonavirus pandemic. On the importance of the hotel and casino complex Fitch Ratings said:
“The integrated resort business expanded rapidly before the pandemic and accounted for more than half of Universal Entertainment’s consolidated revenue and EBITDA [earnings before interest, taxes, depreciation and amortization] in 2019.”