A plan by Macau’s SJM Resorts to shutter the majority of its satellite casinos while potentially buying up two of them is unlikely to significantly impact the company’s credit profile, according to Fitch.
The Ratings Agency said in a note that although the potential debt-funded acquisitions of Ponte 16 and L’Arc Macau could have a moderate negative impact on SJM’s leverage profile, the additional debt would be partially offset by additional EBITDA from continuing to operate the casinos at the two properties. It therefore expects the impact to be “manageable” and for SJM’s EBITDA net leverage to decline to below 5x in 2027.
However, Fitch pointed out that the EBITDA impact on SJM is wholly dependent on the company’s ability to capture market share with the additional tables the satellite closures will provide to its self-operated casinos.
The agency explained that it models the reallocate of around 300 gaming tables and 4,000 members of staff from SJM’s satellite casinos to its self-operated casinos.
“In our rating case, we assume the company will gain sufficient market share, such that the EBITDA impact from the satellite casino closures is broadly neutral,” Fitch said.
SJM currently boasts nine satellite casinos operating under its gaming concession, seven of which will cease gaming operations by the end of the year. The continuation of Ponte 16 and L’Arc as casinos fully owned by SJM is dependent on the company reaching an agreement to acquire them from existing owners and investors.
