Sands China said today it estimates that the net proceeds from the offering of senior notes will be about US$1.48 billion (MOP 11.8 billion) and that it intends to use the net proceeds for incremental liquidity and general corporate purposes.
The gaming operator announced its estimate in a statement to the Hong Kong Stock Exchange. It had first announced its intention of issuing senior notes in a statement to the Hong Kong bourse on Tuesday.
According to the Investopedia website, a senior note is a type of bond that takes precedence over other debts in the event that the company declares bankruptcy and is forced into liquidation. Because they carry a lower degree of risk, senior notes pay lower rates of interest than junior bonds.
Tuesday’s statement revealed the principal terms of the notes: the aggregate principal amount for the 2026 notes is US$800 million, while the one for the 2030 notes is US$700 million. The offering price for the 2026 notes is 99.901 per cent of the principal amount of the 2026 notes, while the one for the 2030 notes is 99.580 per cent of the principal amount of the 2030 notes. The issue date for the 2026 and 2030 notes is June 4 (New York time). The interest rate for the 2026 notes is 3.800 per cent per annum, payable semi-annually in arrears on January 8 and July 8 of each year, while for the 2030 notes the rate is 4.375 per cent per annum, payable semi-annually in arrears on June 18 and December 18 of each year. The respective maturity dates are 8 January 2026 and 18 June 2030. The first interest payment due dates are 8 January 2021 and 18 December 2020 respectively.
The statement confirmed that Sands China has entered into purchase agreements with Barclays Capital, BofA Securities and Goldman Sachs & Co. as representatives of the initial purchasers, in connection with the issuance of the notes.
Concerning the reasons for the issuance of the notes, the statement underlined that “the duration and intensity of the COVID-19 pandemic and related disruptions are uncertain.”
According to the statement, as of last Friday, Sands China had total liquidity of US$2.41 billion, consisting of US$801 million of total cash and cash equivalents, as well as US$1.61 billion of available borrowing capacity under its revolving unsecured credit facility.
Sands China “believes it will be able to support its continuing operations, complete the major construction projects that are underway, and respond to the current COVID-19 pandemic challenges,” the statement said.
The Hong Kong-listed company owns five of Macao’s 41 casinos, according to the website of the Gaming Inspection and Coordination Bureau (DICJ).