SJM Holdings weighs on Macau casino stocks after proposing a US$386 million cash call for licence renewal bid

August 5, 2022 Macau Earnings & Filings

SJM Holdings plunged in Hong Kong on Thursday after the company proposed an equity raise at a 34 per cent discount, as it rushes to raise funds for Macau’s gaming licensing tender.

The Macau casino operator fell as much as 16.9 per cent, before closing 12.1 per cent lower at HK$2.76, while the Hang Seng Index rose 2.1 per cent.

The company said in an exchange filing late on Wednesday that it plans to raise HK$3.03 billion (US$386 million) from issuing 1.4 billion rights shares at HK$2.08 per share, a 34 per cent discount to its last closing price of HK$3.14.

Along with an unsecured term loan of HK$2 billion from majority shareholder Sociedade de Turismo e Diversoes de Macau, analysts expect SJM to have around HK$5 billion to bid for a 10-year gaming concession commencing on January 1, 2023.

Macau has started the highly anticipated bids submission process for global gaming operators to win a licence in the world’s biggest gambling hub, which comes in the wake of the city’s worst Covid-19 outbreak that saw casinos closed for 12 days in July.

SJM Holdings’ Casino Lisboa in Macau. Casinos were closed for 12 days last month as the city battled its worst Covid 19 crisis in over two years.

The licences of six current operators – Sands China, Wynn Macau, MGM China, Galaxy Entertainment, Melco Resorts and SJM Holdings – expire at the end of this year.