In a strategic move, Melco Resorts Finance, a key subsidiary of Melco Resorts & Entertainment, has successfully priced an international offering of senior notes. This offering, comprising US$750 million in aggregate principal amount of 7.625% senior notes maturing in 2032, was priced at 100%.
Purpose and Utilization of Proceeds
The net proceeds from this senior notes offering are earmarked primarily for partially repaying the outstanding principal under Melco Resorts’ revolving credit facility. Any surplus funds will be allocated towards general corporate purposes, reinforcing the company’s financial flexibility.
Background on Debt Reduction Strategy
Melco Resorts has been steadfast in its commitment to debt reduction, particularly in the aftermath of the COVID-19 pandemic. During the fourth quarter of 2023, the company articulated its intent to deleverage by focusing on reducing its substantial debt load, which stood at over US$7 billion. Notably, Melco made significant strides in debt reduction in 2023, having paid down almost US$1 billion.
Revolving Credit Facility Expansion and Extension
It’s noteworthy that Melco Resorts recently extended the maturity date of its revolving credit facility from April 29, 2025, to April 29, 2027. Initially established in April 2020 for an amount of up to HK$14.85 billion (equivalent to US$1.92 billion), this facility provides essential financial support to the company’s operations and growth initiatives.
Impact of Senior Notes Offering
The successful pricing of the US$750 million senior notes underscores investor confidence in Melco Resorts Finance’s financial standing and growth prospects. By securing these notes at an attractive rate, Melco not only shores up its liquidity position but also positions itself to optimize its debt structure and reduce interest expenses.
Strategic Utilization of Funds
The decision to utilize the net proceeds primarily for debt repayment aligns with Melco’s proactive approach to financial management. By reducing its reliance on higher-cost debt instruments, the company aims to enhance its financial health and create value for shareholders.
Market Sentiment and Future Outlook
The announcement of this senior notes offering comes amid a backdrop of recovering market conditions within the integrated resort sector. As global travel resumes and consumer confidence improves, Melco Resorts & Entertainment is poised to capitalize on these trends, leveraging its world-class properties like City of Dreams and Altira Macau to drive revenue growth and profitability.
Melco Resorts Finance’s successful pricing of US$750 million senior notes due in 2032 represents a strategic move to optimize its capital structure and strengthen its financial position. With a clear focus on debt reduction and prudent financial management, Melco is well-positioned to navigate the evolving landscape of the hospitality and gaming industry while delivering sustained value to its stakeholders.