Wynn Macau announced today (Friday) a plan to issue US$600 million (MOP4.85 billion) worth of convertible bonds due in 2029 to professional investors.
The gaming company estimated net proceeds from the bonds at approximately US$586 million upon deduction of commissions and other related expenses.
Wynn said that it intended to use the proceeds for general corporate purposes.
The bonds are convertible into shares at an initial price of HK$10.24 per share, representing a premium of 26.8 per cent over the last closing price of HK$8.08 per share as quoted on the Hong Kong Stock Exchange on 2 March 2023.
The bonds will also turn into approximately 459,774,985 shares, representing 8.8 per cent of the total issued share capital of the company as of 3 March.
This is another “savvy financial maneuver” by Wynn to “shore up the balance sheet in Macau”, which will essentially provide up to US$600 million of new liquidity for Wynn Macau that could potentially be used to “repay the US$600 million of 4.875 per cent notes due in 2024, CBRE Securities, LLC. noted in its equity research.
“This would effectively reduce annual interest expense and kick out the maturity five years in exchange for a potential equity issuance up 40 per cent.” analysts John DeCree and Max Marsh said in the report.
Meanwhile, JP Morgan analysts DS Kim and Mufan Shi expressed in a note that the convert premium and 2029 maturity should provide enough buffer, and the convertible bonds “do seem like an economical way to beef up the balance sheet”.
In addition, Wynn Macau reports its preliminary first quarter results in the stock filing sent to the Hong Kong Exchange, indicating that the company has seen an increasing number of guests to their properties after Covid-related restrictions were scrapped in the past two months, with particular strength during the recent Chinese New Year holiday period.
Business volumes following the Chinese New Year have also remained strong, with the drop in mass market tables recovering to 82 per cent of the corresponding 2019 period, and direct VIP turnover being 20 per cent above 2019 levels.
It was also said that non-gaming business also remained similarly strong with tenant retail sales up 78 per cent from the corresponding period in 2019.
The total operating revenues of Macau operations are expected to be in the range of US$391 million to US$395 million for the two-month period ending February 28, 2023, compared to US$225.1 million in the same period last year.
Adjusted property EBITDA, meanwhile, is expected to lie somewhere between US$94 million and US$98 million for the first two months of the year, compared to US$4.5 million in the same period last year.