Universal Entertainment Takes on New Debt to Pay off Existing Debt Early

Universal Entertainment is going to use new debt to pay off existing debt, according to a recent announcement made by the company. The operator of the Okada Manila in the Philippines is planning on placing, outside its home country of Japan, new notes that will allow it to pay down the principal on existing notes for more favorable terms. The arrangement is expected to be completed this Friday, and the plan will help the casino operator rebound from the hit Okada Manila has taken from COVID-19.

New Debt to Lower Existing Debt

Universal Entertainment has stated that it will place up to $143 million in new notes through the new offering. They will carry an interest rate of 8.5% and won’t be due until December 2024. The proceeds will be used, in large part, to pay off $118 million that the company owes in principal on existing notes. Those notes are currently set to expire this December; however, the total redemption of the notes is almost $125.8 million, according to the company.

The new offering will be backed by Tiger Resort Asia Ltd. and Tiger Resort, Leisure and Entertainment, Inc. (TRLE) Both are Universal Entertainment companies, with TRLE holding the casino license of Okada Manila. Union Gaming Securities LLC, a brokerage headquartered in the US, will manage the private placing; however, no information on the receiver or receivers has been provided.

Universal in a Balancing Act

Okada Manila has seen its share of successes since opening as Manila Bay Resorts in 2008. However, it has also seen its difficulties. The past two years have been particularly problematic, with COVID-19 delivering a fresh round of problems. While other casino jurisdictions around the world have been able to start to recover from the global pandemic, the Philippines hasn’t been so lucky. It has continued to see problems this year and casinos have been shut down or had their operations reduced, including Okada Manila.

In the first quarter of the year, gross gaming revenue at the property lost 41% compared to the same quarter last year. It reported $178 million for the first quarter of 2020, but just $1.05 million in the first quarter of this year. Metro Manila, where the resort is located, has suffered more than other areas and has been forced to take a more restricted position. While much of the country has been able to reopen, Metro Manila has been on “general community quarantine,” forcing Okada Manila to operate at a significantly reduced capacity. The quarantine will remain in place until tomorrow, at which time the situation will be re-evaluated.