Chen Lip Keong, the founder and primary shareholder of NagaCorp Ltd., offered an up to US$80 million loan, which Moody’s Investors Service rated as “credit positive.” This loan is appealing as it will assist in meeting a corporate bond’s 2024 maturity.
Additionally, according to Moody’s, NagaCorp—the company that runs the gambling establishment NagaWorld in Phnom Penh, the capital of Cambodia—is still exposed to “refinancing risk.” In order to pay back the 2024 notes, the corporation has to continue growing its revenues and have “low discretionary spending.”
The 8.0% annual interest rate two-year unsecured loan will be used by NagaCorp to refinance and/or settle a portion of its outstanding US$ 472.2 million notes that are due in July 2024.
NagaCorp has $298 million in cash and cash equivalents as of September 30. To satisfy the bond maturity, the business will need to produce US$135 million in free cash flow over the next three quarters, assuming it maintains its working cash position at US$40 million and uses the US$80 million shareholder loan in full.
The first and fourth quarters of regular business years usually see the highest levels of Cambodian tourist visits, which is why Moody’s expects NagaCorp’s profitability to rise over the following 12 months. NagaCorp’s profits before interest, taxes, depreciation, and amortization (EBITDA) are expected to be around US$350 million this year and US$485 million in 2024, according to the rating agency. However, if the rebound isn’t as quick as anticipated, NagaCorp’s liquidity may be threatened.
EBITDA for NagaCorp was US$215.4 million in the first nine months of 2023.
Additionally, according to Moody’s, the construction of Naga 3, an expansion to the NagaWorld complex, has been put off until September 2029, a four-year delay. The firm plans to postpone cash payments until the bond’s maturity date and instead invest around US$40 million in development capital over the course of the next year. Since 2021, NagaCorp has not paid cash dividends.
Original story by: GGRAsia
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