Sands China Entered into Credit Facility Waiver Extension

Sands China informed its investors last week that a facility agreement between the company and its main creditor, Bank of China Limited has been amended. The $2 billion revolving unsecured credit facility available to the operator until July 21, 2023, had two financial covenants, a consolidated leverage ratio and a consolidated interest coverage ratio, renegotiated.

2018 Credit Facility Amended in March

The two financial covenants in focus were defined in the 2018 credit facility and were amended on March 27, 2020. According to the amendment, the lender waived the requirement for Sands China to maintain the consolidated leverage ratio at the last day of any financial reporting quarter not higher than 4 to 1, and the consolidated interest coverage ratio higher than 2.5 to 1.

As per the March original waiver letter, the waived requirement was valid until July 1, 2021, and now Sands China entered into a waiver extension, to extend the period to January 1, 2022. In addition to the extended duration for the waiver agreement, the casino and hospitality operator amended some other provisions in the 2018 credit facility.

Waiver Extension and Further Amendments

Sands China acquired the option to increase the lenders’ total commitment by an aggregate amount of up to $1 billion, and if the total commitment exceeds $2 billion at any time until the end date of the waiver extension and the consolidated leverage ratio exceeds 4 to 1, the casino operator’s ability to declare or make dividend payment will be restricted.

The company agreed to pay a customary fee to the lender, pursuant to the waiver extension agreement, and issued caution to potential investors regarding any future dealings with company’s securities.

Sands China Issued New Debt

Sands China was materially affected by the coronavirus-induced shutdown of casino properties as in Macau, so in Singapore. In June the company announced in a filing to the HKEX it would issue senior unsecured notes to the amount of $1.5 billion to boost its liquidity. The proposed debt was only offered to professional investors that are qualified institutional buyers.

Despite the adverse effect on its business, in July it became clear through another filing to the HKEX that Sands China had waived for its mall tenants in Macau and Singapore $170 million in rent for the first 6 months of the year. The amount waived accounted for most of the decline in mall revenue for the hospitality operator during the period.