Macau legend says material uncertainties about ability to carry on as mounting debts trigger default – IAG
Macau Legend Development Ltd has warned of ‘significant uncertainties’ which could cast significant doubt on its ability to continue in business after confirming it had breached covenants in the loan covenants which constituted an event of default with its lenders.
In releasing its long-delayed financial results for the six months to June 30, 2022, which saw the company slump to a net loss of HK$486 million (US$62 million), Macau Legend said its bank borrowings totals currently stood at HK$2.37 billion (US$302 million). million) of which HK$237 million ($30 million) is to be repaid within the next 12 months.
But burdened by the continuing effects of the COVID-19 pandemic, the company’s cash and cash equivalents stood at just HK$66 million (US$8.4 million) at the end of the year. the reference period.
“As of June 30, 2022, the Group had breached certain loan covenants and, as of the date of approval of the interim financial information, the Group is in the process of requesting a new waiver from the creditor banks,” he said. .
“The non-compliance constituted an event of default, so the banks can exercise their right to serve notice to demand the immediate repayment of all outstanding bank loans, including interest. As a result, bank loans of HK$2.37 billion have been reclassified as current liabilities.
Macau Legend said it was taking steps to improve its position, including requesting its banks to provide continued credit facilities to the group, obtaining banks’ approval for a further covenant amendment and/or granting waiver for breach of loan covenants and extension. for the repayment of the group’s bank loans, and the successful and timely implementation of a divestment plan.
“Should the Group fail to achieve the above plans and measures, it may not be able to continue its activities and adjustments may have to be made to reduce the carrying amount of the Group’s assets to their recoverable amounts. , to provide any other liabilities that may arise and to reclassify non-current assets and liabilities to current assets and liabilities as appropriate,” he said.
Macau Legend’s 1H22 results saw total revenue increase 3.1% year-on-year to HK$543.8 million, comprising service revenue received from SJM for gaming services provided and revenue of its casino operations in Laos. Gaming revenue increased 6.7% year-on-year to HK$449.3 million.
Adjusted EBITDA was a loss of HK$160.5 million, widened from a loss of HK$132.9 million recorded 12 months earlier.
Macau Legend owns the grounds of Macau Fisherman’s Wharf where it operates the Legend Palace and Babylon casinos. He also manages Savan Legend in Laos.
Shares of the company resumed trading on Tuesday, after being suspended since Sept. 1 pending the release of its first-half results.