Melco Resorts Finance Announces Pricing of Senior Notes Offering

Rhea-AI Summary

Melco Resorts Finance announces the pricing of US$750 million senior notes due 2032. The proceeds will be used to repay outstanding credit facility balances and for general corporate purposes.

Financial Analyst

The pricing of Melco Resorts Finance's senior notes offering is a significant financial move, indicating the company's strategy for managing its debt portfolio. The decision to issue US$750 million in senior notes at a 7.625% interest rate, maturing in 2032, suggests a proactive approach to capital management. The fixed interest rate provides investors with clarity on the expected returns, which could be considered attractive given the current interest rate environment.

It is important to note that the senior notes are being priced at 100%, which means they are being offered at par value. This indicates that the market perceives the notes to offer a fair return relative to the risk. The use of proceeds to repay existing debt under the revolving credit facility is a common financial strategy to manage interest expenses and improve the debt maturity profile. However, the fact that Melco will not be a guarantor of the New Notes could be a point of consideration for potential investors, as it may imply a higher risk profile for the debt issuance.

Market Research Analyst

The hospitality and gaming sector, where Melco operates, is highly sensitive to macroeconomic factors such as tourism flows, disposable income and regulatory environments. The issuance of senior notes by Melco Resorts Finance should be viewed within the context of the sector's recovery trajectory post-pandemic. Investor appetite for corporate debt in this sector can serve as a barometer for market confidence in the recovery and growth prospects of the industry.

The 7.625% yield on the new notes is indicative of the risk premium investors demand from a company operating in an industry with such volatility. This yield also reflects the market's view on the creditworthiness of Melco Resorts Finance and its parent company. For stakeholders, the debt issuance could signal a strengthening of the company's liquidity position, which is essential for capital-intensive operations and could potentially lead to future investments or expansion.

Legal Expert

From a legal standpoint, the offering's compliance with Rule 144A and Regulation S under the U.S. Securities Act of 1933 is paramount. These rules allow Melco Resorts Finance to sell securities to qualified institutional buyers without the need for a public offering, streamlining the process and potentially reducing costs associated with registration. However, the limitation of the sale to institutional buyers and the absence of a public offering could limit the pool of potential investors.

The lack of intention to register the New Notes in the United States is also noteworthy. This decision may affect the liquidity of the notes, as they cannot be sold freely in the U.S. secondary market without registration or an exemption. The legal intricacies of such offerings require clear communication to avoid any misinterpretation of the securities' terms and to ensure compliance with securities regulations.

MACAU, April 09, 2024 (GLOBE NEWSWIRE) -- Melco Resorts Finance Limited (“Melco Resorts Finance”) announces that it has priced its international offering of senior notes (the “New Notes”). Melco Resorts Finance is a wholly-owned subsidiary of Melco Resorts & Entertainment Limited (“Melco”).

The offering consists of US$750 million aggregate principal amount of 7.625% senior notes due 2032. The New Notes were priced at 100%. Melco Resorts Finance intends to use the net proceeds from the offering to partially repay the principal amount outstanding under the revolving credit facility, pursuant to a senior facilities agreement entered into by MCO Nominee One Limited, a subsidiary of Melco Resorts Finance, on April 29, 2020, as amended or supplemented from time to time, together with accrued interest and associated costs, and any remaining balance for general corporate purposes.

The New Notes are proposed to be senior obligations of Melco Resorts Finance, ranking equally with all of Melco Resorts Finance’s existing and future senior indebtedness. Melco will not be a guarantor of the New Notes.

The New Notes are being offered and sold in the United States to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and outside of the United States in reliance on Regulation S under the Securities Act. The New Notes will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state laws. Melco Resorts Finance does not intend to register any portion of the offering of the proposed New Notes in the United States.

Nothing in this press release constitutes an offer to buy, or a solicitation of an offer to sell, securities in the United States or any other jurisdiction in which such offer or solicitation would be unlawful. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Melco Resorts Finance’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, but are not limited to, (i) pace of recovery from the impact of COVID-19 on our business, our industry and the global economy, (ii) risks associated with the amended Macau gaming law and its implementation by the Macau government, (iii) changes in the gaming market and visitations in Macau, (iv) capital and credit market volatility, (v) local and global economic conditions, (vi) our anticipated growth strategies, (vii) gaming authority and other governmental approvals and regulations, and (viii) our future business development, results of operations and financial condition. In some cases, forward-looking statements can be identified by words or phrases such as “may”, “will”, “expect”, “anticipate”, “target”, “aim”, “estimate”, “intend”, “plan”, “believe”, “potential”, “continue”, “is/are likely to” or other similar expressions. All information provided in this press release is as of the date of this press release, and Melco Resorts Finance undertakes no duty to update such information, except as required under applicable law.

For investment community, please contact:

Jeanny Kim
Senior Vice President, Group Treasurer
Tel: +852 2598 3698
Email: jeannykim@melco-resorts.com

For media enquiries, please contact:

Chimmy Leung
Executive Director, Corporate Communications
Tel: +852 3151 3765
Email: chimmyleung@melco-resorts.com

FAQ

What is the purpose of Melco Resorts Finance's international offering of senior notes?

The purpose is to partially repay the principal amount outstanding under the revolving credit facility and for general corporate purposes.

What is the interest rate on the New Notes?

The New Notes carry a 7.625% interest rate.

How much is the aggregate principal amount of the New Notes?

The offering consists of US$750 million aggregate principal amount of senior notes.

Who is Melco Resorts Finance a subsidiary of?

Melco Resorts Finance is a wholly-owned subsidiary of Melco Resorts & Entertainment

Where are the New Notes being offered and sold?

The New Notes are being offered and sold in the United States to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act of 1933.