The scheduled completion date for NagaCorp’s US$3.5 billion Naga 3 expansion of its integrated resort NagaWorld in Phnom Penh, Cambodia, has been extended by four years as the company looks to rein in its capital expenditure in the wake of the COVID-19 pandemic.
NagaCorp has also flagged a potential reduction in the size and scale of the development.
Details of the amended development terms were outlined in an overnight filing in which NagaCorp revealed that it has entered into an agreement with its contractor which updates the completion date of the original Design and Build Agreement from 30 September 2025 until 30 September 2029. The agreement is also subject to other further adjustments as mutually agreeable between Naga 3 Company Limited and the contractor, the company explained.
According to NagaCorp, the extended deadline was necessary “in view of the external geopolitical macroeconomic environment and the stiff global inflationary pressures.”
As such, “the company is carefully and seriously considering options of developing Naga 3 matching revenue generation with capex expenditure, and such options shall include [a] project resize.”
NagaCorp did, however, insist it remains confident that it can fulfil all of its financial obligations and that “up to date, the fundamentals and the directions of the company remain unchanged.”
The extension comes after ratings agency Moody’s Investors Service warned late last year that NagaCorp was facing a default on US$421.7 million in outstanding notes due in July 2024, despite undertaking an offer at that time to repurchase up to US$120 million of the outstanding notes.
Moody’s said it was particularly concerned over NagaCorp’s access to potential sources of funding given NagaWorld’s “slow recovery”.
“NagaCorp’s operating performance is recovering following pandemic-related disruptions last year, however, we expect EBITDA in 2022 and 2023 to remain well below that of 2019,” Moody’s analysts wrote in November.
“Consequently, we expect the company is likely to require external financing to repay its outstanding notes. However, its ability to raise external financing is difficult because of the tight funding conditions prevailing in the current economic environment.
“At the same time, NagaCorp has limited sources of liquidity because of its lack of bank facilities and divestible noncore assets.”
NagaCorp more recently reported gross gaming revenues at its Cambodian integrated resort of US$117 million in the three months to 31 March 2023, with mass market volumes reaching 81% of pre-COVID levels.
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