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Studio City Casino Macao Faces Catastrophe, Loan Deposit Faces Disaster
With operator Wynn Resorts Limited's $4.2 billion Wynn Palace Kotai Casino Resort set to open Monday, news broke that nearby Studio City Casino Macau development would not be able to repay the loan.
According to reports by television stations and television stations, the $3.2 billion Studio City Casino Macau, run by operator Melco Crown Entertainment Limited, is without VIP tables in an attempt to attract the attention of families and China's growing middle class. Faced with Chinese President Xi Jinping's continuous anti-corruption drive and economic weakening, diversification was widely seen as a safer bet and huge developments were also completed with Batman rides and magic shows, along with hotels and restaurants.
Teleleifusao De Macao reports that these new facilities are struggling to attract new customers as a result, with 30.7 million visitors unchanged through the first half of the year, down 2.6% year-on-year to 30.7 million.
In response, rating agency Standard & Poor's Financial Services issued a negative outlook on development bonds, warning Studio City Casino Macao would not be able to pay back the $1.41 billion loan it used to complete construction anytime soon.
Studio City Casino Macao may also struggle to borrow additional cash to pay off existing debts, with American hedge fund Silver Point and Oaktree Capital likely to be Melco Crown Entertainment Limited's 40% partner, according to a report published by Bloomberg News on Monday. Hong Kong-listed Melco Crown Entertainment Co Ltd, which holds the remaining 60% of its investment while declaring bonds issued to investors have fallen to 42.5% of its original value, is distancing itself from the rescue scenario.
"Studio City Casino Macau is within a completely separate credit group and the debt is not dependent on Melco Crown Entertainment Limited," Melco Crown Entertainment Limited told Bloomberg. "Investors should not assume that Melco Crown Entertainment Limited will provide financial support to Studio City Casino Macau or intervene for Studio City Casino Macau."
Bloomberg News claimed that many analysts believe Melco Crown Entertainment Limited would want to take full control of the Cotai Resort casino. Lawrence Hoyau-Lune, the company's chairman and chief executive officer, told financial magazine Barron's Asia two months ago that he would not rush to buy out a handful of partners because both sides are far apart on how valuable the development project is.
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