Japanese gaming fellowship Universal Entertainment Corp.’s (UEC) deferred payment rating has been lowered to “CCC+” from “B” by Fitch Ratings. The research steady verbalized concerns around the operator’s plans to lean its Okada Manila integrated holiday resort business organisation on a US exchange.
Corporate bonds rated inward “C” soil are considered extremely speculative and vulnerable to default. That’s specially relevant when it comes to Universal, because the pachinko device producer has $118 1000000 worth of senior secured notes coming due inwards December. Fitch worries that the accompany may non make the liquidity to divine service that debt unless unloose cash in flux (FCF) “improves significantly in the sec half or additional funding is raised.”
We also trust that UEC’s business concern profile is no thirster commensurate with the ‘B’ category in scene of its increased earnings and hard currency rate of flow volatility, which has been amplified past the pandemic in both the cassino business sector and domestic help operations,” said the ratings agency.
Okada capital of the Philippines is the largest integrated resort inwards Manila’s Entertainment City — a realm where gaming venues experience only recently resumed operating following the coronavirus pandemic and are doing so at special capacity. For now, Okada is only allowing members of its trueness computer programme and devoted gamblers into the casino.
Okada capital of the Philippines SPAC Deal Not a Fix
Earlier this year, Universal said it’s looking for a US-based special resolve acquisition companion (SPAC) to partner with to play the Okada capital of the Philippines byplay to a US equity exchange, such as the Nasdaq or New House of York Stock Exchange (NYSE).
Such a dealing could assist with the parent company’s liquidity concerns. But it doesn’t accounting for a possible uptick inward COVID-19 cases in the Philippines, which would potential leading to another shutdown of the venue. Nor does the contrive factor that blank-check transactions late fell out of favor, as investors enquiry relax post-deal performance by the mark companies.
“UEC believes it has several options to shoring up liquidity, such as a potentiality listing of its Philippine-based casino stage business or a refinancing. Considerable uncertainty exists over these options because UEC is vulnerable to pandemic-related disruptions,” said Fitch.
Universal proclaimed in Feb that it’s pursuing a merger for the structured resort business organization with a US-based SPAC, and said inward belatedly March that it’s mulling several offers. But the accompany has been quiet on this face for o'er deuce months.
Tough Comps for Universal
Based on profitability and regional exposure, Okada Manila is somewhat like to Australia’s Crown Resorts and Las Vegas Sands (NYSE:LVS). But those operators are rated “BBB” and “BBB-”, respectively.
“Crown and Sands also operate inward more horse barn regulatory regimes than UEC,” adds Fitch. “The Japanese company’s carrying out and operational risks are also notably higher than that of Crown and other peers, as UEC has non in time naturalized its spatial relation inward the junket and mellow rolling wave segments.”
Analysts expect operators with exposure to the Philippines will escort those venues post only when small recoveries later this twelvemonth before reverting to pre-pandemic levels inward 2023.