Melco Resorts & Entertainment LTD 6-K, filed May 27, 2022
Melco Resorts & Entertainment LTD (MLCO)
About this 6-K
Melco Resorts & Entertainment LTD filed this 6-K on May 27, 2022.
Table of Contents
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a–16 OR 15d–16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2022
Commission File Number: 001-33178
MELCO RESORTS & ENTERTAINMENT LIMITED
38th Floor, The Centrium
60 Wyndham Street
Central
Hong Kong
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20–F or Form 40–F. Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Table of Contents
Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MELCO RESORTS & ENTERTAINMENT LIMITED | ||
| By: | /s/ Geoffrey Davis | |
| Name: | Geoffrey Davis, CFA | |
| Title: | Chief Financial Officer | |
Date: May 27, 2022
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Table of Contents
EXHIBIT INDEX
| Exhibit No. |
Description | |
| Exhibit 99.1 | Quarterly Report of Melco Resorts Finance Limited | |
Exhibit 99.1
Explanatory Note
Melco Resorts Finance Limited’s Quarterly Report
for the Three Months Ended March 31, 2022
This quarterly report provides Melco Resorts Finance Limited’s unaudited condensed consolidated financial statements, comprising condensed consolidated balance sheets, condensed consolidated statements of operations and condensed consolidated statements of cash flows, for the three months ended March 31, 2022, together with the related information.
Melco Resorts Finance Limited
Report for the First Quarter of 2022
TABLE OF CONTENTS
| INTRODUCTION |
3 | |||
| SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS |
5 | |||
| GLOSSARY |
6 | |||
| EXCHANGE RATE INFORMATION |
9 | |||
| FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
10 | |||
| INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
F-1 |
INTRODUCTION
In this quarterly report, unless otherwise indicated:
| • | “2015 Credit Facilities” refer to the HK$13.65 billion (equivalent to approximately US$1.75 billion) senior secured credit facilities agreement dated June 19, 2015, entered into by Melco Resorts Macau, as borrower (originally comprising (i) a Hong Kong dollar term loan facility of HK$3.90 billion (equivalent to approximately US$500 million) with a term of six years and (ii) a HK$9.75 billion (equivalent to approximately US$1.25 billion) revolving credit facility, and in respect of which, following the repayment on May 7, 2020 of all outstanding loan amounts (together with accrued interest and associated costs) other than the HK$1.0 million (equivalent to approximately US$128,000) which remained outstanding under the term loan facility and the HK$1.0 million (equivalent to approximately US$128,000) revolving credit facility commitment which remained available under the revolving credit facility, all other commitments were canceled), the maturity date of which was extended to June 2022 pursuant to a waiver letter executed on April 29, 2020, and was further extended to December 31, 2022 pursuant to an extension request letter executed on May 4, 2022; |
| • | “2020 Credit Facilities” refer to the senior facilities agreement dated April 29, 2020, entered into between, among others, our subsidiary MCO Nominee One Limited (“MCO Nominee One”), as borrower, and Bank of China Limited, Macau Branch, Bank of Communications Co., Ltd. Macau Branch and Morgan Stanley Senior Funding, Inc., as joint global coordinators, under which lenders have made available HK$14.85 billion (equivalent to approximately US$1.90 billion) in a revolving credit facility for a term of five years; |
| • | “2025 Senior Notes” refer to the US$1.0 billion aggregate principal amount of 4.875% senior notes due 2025 we issued, of which US$650.0 million in aggregate principal amount was issued on June 6, 2017 (the “First 2025 Senior Notes”) and US$350.0 million in aggregate principal amount was issued on July 3, 2017 (the “Additional 2025 Senior Notes”); |
| • | “2026 Senior Notes” refer to the US$500.0 million aggregate principal amount of 5.250% senior notes due 2026 we issued on April 26, 2019; |
| • | “2027 Senior Notes” refer to the US$600.0 million aggregate principal amount of 5.625% senior notes due 2027 we issued on July 17, 2019; |
| • | “2028 Senior Notes” refer to the US$850.0 million aggregate principal amount of 5.750% senior notes due 2028 we issued, of which US$500.0 million in aggregate principal amount was issued on July 21, 2020 (the “First 2028 Senior Notes”) and US$350.0 million in aggregate principal amount was issued on August 11, 2020 (the “Additional 2028 Senior Notes”); |
| • | “2029 Senior Notes” refer to the US$1.15 billion aggregate principal amount of 5.375% senior notes due 2029 we issued, of which US$900.0 million in aggregate principal amount was issued on December 4, 2019 (the “First 2029 Senior Notes”) and US$250.0 million in aggregate principal amount was issued on January 21, 2021 (the “Additional 2029 Senior Notes”); |
| • | “Altira Macau” refers to an integrated resort located in Taipa, Macau; |
| • | “China” and “PRC” refer to the People’s Republic of China, excluding the Hong Kong Special Administrative Region of the PRC (Hong Kong), the Macau Special Administrative Region of the PRC (Macau) and Taiwan from a geographical point of view; |
| • | “City of Dreams” refers to an integrated resort located in Cotai, Macau, which currently features casino areas and four luxury hotels, including a collection of retail brands, a wet stage performance theater (temporarily closed since June 2020) and other entertainment venues; |
| • | “DICJ” refers to the Direcção de Inspecção e Coordenação de Jogos (the Gaming Inspection and Coordination Bureau), a department of the Public Administration of Macau; |
| • | “HK$” and “H.K. dollar(s)” refer to the legal currency of Hong Kong; |
| • | “Melco Resorts Macau” refers to our subsidiary, Melco Resorts (Macau) Limited, a Macau company and the holder of our gaming subconcession; |
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| • | “Mocha Clubs” refer to, collectively, our clubs with gaming machines, which are now the largest non-casino based operations of electronic gaming machines in Macau; |
| • | “our subconcession” and “our gaming subconcession” refer to the Macau gaming subconcession held by Melco Resorts Macau; |
| • | “Parent” and “Melco” refer to Melco Resorts & Entertainment Limited, a Cayman Islands exempted company with limited liability; |
| • | “Pataca(s)” or “MOP” refer to the legal currency of Macau; |
| • | “SCI” refers to Studio City International Holdings Limited, an exempted company registered by way of continuation in the Cayman Islands, the American depositary receipts of which are listed on the New York Stock Exchange; |
| • | “Services and Right to Use Arrangements” refers to the agreement entered into among, inter alia, Melco Resorts Macau and Studio City Entertainment, dated May 11, 2007 and amended on June 15, 2012, and any other agreements or arrangements entered into from time to time, which may amend, supplement or relate to the aforementioned agreements or arrangements; |
| • | “Studio City” refers to a cinematically-themed integrated resort in Cotai, an area of reclaimed land located between the islands of Taipa and Coloane in Macau; |
| • | “Studio City Casino” refers to the gaming areas being operated within Studio City; |
| • | “Studio City Entertainment” refers to our affiliate, Studio City Entertainment Limited, a Macau company which is a subsidiary of the Parent; |
| • | “US$” and “U.S. dollar(s)” refer to the legal currency of the United States; |
| • | “U.S. GAAP” refers to the U.S. generally accepted accounting principles; and |
| • | “we,” “us,” “our” and “our company” refer to Melco Resorts Finance Limited and, as the context requires, its predecessor entities and its consolidated subsidiaries. |
This quarterly report includes our unaudited condensed consolidated financial statements for the three months ended March 31, 2022.
Any discrepancies in any table between totals and sums of amounts listed therein are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.
4
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements that relate to future events, including our future operating results and conditions, our prospects and our future financial performance and condition, all of which are largely based on our current expectations and projections. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. We operate in a heavily regulated and evolving industry, and have a highly leveraged business model. Moreover, we operate in Macau’s gaming sector, a market with intense competition and where the Macau Legislative Assembly is currently considering a proposal to amend the key gaming legislation, and therefore new risk factors may emerge from time to time. It is not possible for our management to predict all risk factors, nor can we assess the impact of these factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed or implied in any forward-looking statement. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, but are not limited to, (i) the global COVID-19 outbreak, caused by a novel strain of the coronavirus, and the continued impact of its consequences on our business, our industry and the global economy, (ii) growth of the gaming market and visitations in Macau, (iii) capital and credit market volatility, (iv) local and global economic conditions, (v) our anticipated growth strategies, (vi) gaming authority and other governmental approvals and regulations, (vii) proposed amendments to the gaming law in Macau, the extension of current gaming concessions and subconcessions and tender for new gaming concessions, and (viii) our future business development, results of operations and financial condition. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions.
The forward-looking statements made in this quarterly report relate only to events or information as of the date on which the statements are made in this quarterly report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this quarterly report with the understanding that our actual future results may be materially different from what we expect.
5
GLOSSARY
| “cage” | a secure room within a casino with a facility that allows patrons to carry out transactions required to participate in gaming activities, such as exchange of cash for chips and exchange of chips for cash or other chips
| |
| “chip” | round token that is used on casino gaming tables in lieu of cash
| |
| “concession” | a government grant for the operation of games of fortune and chance in casinos in Macau under an administrative contract pursuant to which a concessionaire, or the entity holding the concession, is authorized to operate games of fortune and chance in casinos in Macau
| |
| “drop” | the amount of cash to purchase gaming chips and promotional vouchers that is deposited in a gaming table’s drop box, plus gaming chips purchased at the casino cage
| |
| “drop box” | a box or container that serves as a repository for cash, chip purchase vouchers, credit markers and forms used to record movements in the chip inventory on each table game
| |
| “electronic gaming table” | table with an electronic or computerized wagering and payment system that allow players to place bets from multiple-player gaming seats
| |
| “gaming machine” | slot machine and/or electronic gaming table
| |
| “gaming machine handle” | the total amount wagered in gaming machines
| |
| “gaming machine win rate” |
gaming machine win (calculated before non-discretionary incentives (including our point-loyalty programs) and allocating casino revenues related to goods and services provided to gaming patrons on a complimentary basis) expressed as a percentage of gaming machine handle
| |
| “gaming promoter” | an individual or corporate entity who, for the purpose of promoting rolling chip and other gaming activities, arranges customer transportation and accommodation, provides credit in its sole discretion if authorized by a gaming operator and arranges food and beverage services and entertainment in exchange for commissions or other compensation from a gaming concessionaire or subconcessionaire
| |
| “integrated resort” | a resort which provides customers with a combination of hotel accommodations, casinos or gaming areas, retail and dining facilities, MICE space, entertainment venues and spas
| |
| “junket player” | a player sourced by gaming promoters to play in the VIP gaming rooms or areas
| |
| “marker” | evidence of indebtedness by a player to the casino or gaming operator
| |
| “mass market patron” | a customer who plays in the mass market segment
|
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| “mass market segment” | consists of both table games and gaming machines played by mass market players primarily for cash stakes
| |
| “mass market table games drop” | the amount of table games drop in the mass market table games segment
| |
| “mass market table games hold percentage” | mass market table games win (calculated before discounts, commissions, non-discretionary incentives (including our point-loyalty programs) and allocating casino revenues related to goods and services provided to gaming patrons on a complimentary basis) as a percentage of mass market table games drop
| |
| “mass market table games segment” | the mass market segment consisting of mass market patrons who play table games
| |
| “MICE” | Meetings, Incentives, Conventions and Exhibitions, an acronym commonly used to refer to tourism involving large groups brought together for an event or specific purpose
| |
| “non-negotiable chip” | promotional casino chip that is not to be exchanged for cash
| |
| “premium direct player” | a rolling chip player who is a direct customer of the concessionaires or subconcessionaires and is attracted to the casino through marketing efforts of the gaming operator
| |
| “rolling chip” or “VIP rolling chip” | non-negotiable chip primarily used by rolling chip patrons to make wagers
| |
| “rolling chip patron” | a player who primarily plays on rolling chip or VIP rolling chip tables and typically plays for higher stakes than mass market gaming patrons
| |
| “rolling chip segment” | consists of table games played in private VIP gaming rooms or areas by rolling chip patrons who are either premium direct players or junket players
| |
| “rolling chip volume” | the amount of non-negotiable chips wagered and lost by the rolling chip market segment
| |
| “rolling chip win rate” | rolling chip table games win (calculated before discounts, commissions, non-discretionary incentives (including our point-loyalty programs) and allocating casino revenues related to goods and services provided to gaming patrons on a complimentary basis) as a percentage of rolling chip volume
| |
| “slot machine” | traditional slot or electronic gaming machine operated by a single player
| |
| “subconcession” | an agreement for the operation of games of fortune and chance in casinos between the entity holding the concession, or the concessionaire, and a subconcessionaire, pursuant to which the subconcessionaire is authorized to operate games of fortune and chance in casinos in Macau |
7
| “table games win” | the amount of wagers won net of wagers lost on gaming tables that is retained and recorded as casino revenues. Table games win is calculated before discounts, commissions, non-discretionary incentives (including our point-loyalty programs) and allocating casino revenues related to goods and services provided to gaming patrons on a complimentary basis
| |
| “VIP gaming room” | gaming rooms or areas that have restricted access to rolling chip patrons and typically offer more personalized service than the general mass market gaming areas |
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EXCHANGE RATE INFORMATION
The majority of our current revenues are denominated in H.K. dollars, while our current expenses are denominated predominantly in Patacas and H.K. dollars, and in connection with a portion of our indebtedness and certain expenses, in U.S. dollars. The non-financial pages of this quarterly report include all translations from H.K. dollars to U.S. dollars and from U.S. dollars to H.K. dollars at a rate of HK$7.827482 to US$1.00, unless otherwise noted.
The H.K. dollar is freely convertible into other currencies (including the U.S. dollar). Since October 17, 1983, the H.K. dollar has been officially linked to the U.S. dollar at the rate of HK$7.80 to US$1.00. The market exchange rate has not deviated materially from the level of HK$7.80 to US$1.00 since the peg was first established. However, in May 2005, the Hong Kong Monetary Authority broadened the trading band from the original rate of HK$7.80 per U.S. dollar to a rate range of HK$7.75 to HK$7.85 per U.S. dollar. The Hong Kong government has stated its intention to maintain the link at that rate, and, acting through the Hong Kong Monetary Authority, has a number of means by which it may act to maintain exchange rate stability. However, no assurance can be given that the Hong Kong government will maintain the link at HK$7.75 to HK$7.85 per U.S. dollar or at all.
The Pataca is pegged to the H.K. dollar at a rate of HK$1.00 to MOP1.03. All translations from Pataca to U.S. dollar in the non-financial pages of this quarterly report were made at the exchange rate of MOP8.062305 to US$1.00.
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in connection with our unaudited condensed consolidated financial statements included elsewhere in this quarterly report. Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2021. The historical results are not necessarily indicative of the results of operations to be expected in the future. Certain statements in this “Financial Condition and Results of Operations” are forward-looking statements.
Summary of Financial Results
For the first quarter of 2022, our total operating revenues were US$401.7 million, a decrease of 14.6% from US$470.2 million of total operating revenues for the first quarter of 2021. The decrease in total operating revenues was primarily attributable to a softer performance at City of Dreams, as well as decreased casino revenues generated from the operations of Studio City Casino by our subsidiary, Melco Resorts Macau, the gaming subconcessionaire. Such decrease mainly resulted from heightened border restrictions in Macau related to COVID-19 in the first quarter of 2022. Net income/loss from Studio City Casino gaming operations are reimbursed to/from Studio City Entertainment pursuant to the Services and Right to Use Arrangements. Such reimbursement is included in general and administrative expenses.
Net loss for the first quarter of 2022 was US$123.8 million, compared to net loss of US$144.1 million for the first quarter of 2021. The decrease in net loss was primarily attributable to lower bad debt provisions and our cost containment efforts, partially offset by softer performance of City of Dreams mentioned above.
The following summarizes the results of our operations:
| Three Months Ended March 31, |
||||||||
| 2022 | 2021 | |||||||
| (In thousands of US$) | ||||||||
| Total operating revenues |
$ | 401,701 | $ | 470,160 | ||||
| Total operating costs and expenses |
$ | (465,224 | ) | $ | (552,362 | ) | ||
| Operating loss |
$ | (63,523 | ) | $ | (82,202 | ) | ||
| Net loss |
$ | (123,788 | ) | $ | (144,055 | ) | ||
Results of Operations
City of Dreams First Quarter Results
For the quarter ended March 31, 2022, total operating revenues at City of Dreams were US$278.2 million, compared to US$321.8 million in the first quarter of 2021. The decrease in the total operating revenues was primarily a result of softer performance in the mass market table games segment.
Rolling chip volume was US$2.45 billion for the first quarter of 2022 versus US$4.13 billion in the first quarter of 2021. The rolling chip win rate was 3.93% in the first quarter of 2022 versus 2.36% in the first quarter of 2021. The expected rolling chip win rate range is 2.85% - 3.15%.
Mass market table games drop decreased to US$552.5 million in the first quarter of 2022, compared with US$730.9 million in the first quarter of 2021. The mass market table games hold percentage was 30.6% in the first quarter of 2022, compared to 31.7% in the first quarter of 2021.
Gaming machine handle for the first quarter of 2022 was US$380.1 million, compared with US$510.2 million in the first quarter of 2021. The gaming machine win rate was 3.4% in the first quarter of 2022 versus 3.3% in the first quarter of 2021.
Total non-gaming revenue at City of Dreams in the first quarter of 2022 was US$58.8 million, compared with US$65.3 million in the first quarter of 2021.
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Altira Macau First Quarter Results
For the quarter ended March 31, 2022, total operating revenues at Altira Macau were US$14.0 million, compared to US$14.4 million in the first quarter of 2021.
In the first quarter of 2021, rolling chip volume was US$1.10 billion and the rolling chip win rate was 1.60%. The expected rolling chip win rate range is 2.85% - 3.15%.
In the mass market table games segment, drop was US$44.4 million in the first quarter of 2022 versus US$51.4 million in the first quarter of 2021. The mass market table games hold percentage was 26.3% in the first quarter of 2022, compared with 19.1% in the first quarter of 2021.
Gaming machine handle for the first quarter of 2022 was US$50.5 million, compared with US$60.2 million in the first quarter of 2021. The gaming machine win rate was 4.1% in the first quarter of 2022 versus 3.9% in the first quarter of 2021.
Total non-gaming revenue at Altira Macau in the first quarter of 2022 was US$2.4 million, compared with US$3.1 million in the first quarter of 2021.
Mocha Clubs First Quarter Results
Total operating revenues from Mocha Clubs were US$21.2 million in the first quarter of 2022, compared to US$17.8 million in the first quarter of 2021.
Gaming machine handle for the first quarter of 2022 was US$478.1 million, compared with US$415.2 million in the first quarter of 2021. The gaming machine win rate was 4.4% in the first quarter of 2022 versus 4.3% in the first quarter of 2021.
Other Factors Affecting First Quarter Earnings
Total net non-operating expenses for the first quarter of 2022 were US$60.1 million, which mainly included interest expenses of US$60.3 million, compared to total net non-operating expenses of US$61.7 million for the first quarter of 2021, which mainly included interest expenses of US$57.7 million, net of amounts capitalized.
Liquidity and Capital Resources
We have relied and intend to rely on cash generated from our operations and debt and equity financings to meet our financing needs and repay our indebtedness, as the case may be. We expect to have significant capital expenditures in the future as we continue to develop our properties. Any other future developments may be subject to further financing and a number of other factors, many of which are beyond our control.
As of March 31, 2022, we held cash and cash equivalents of US$701.5 million and restricted cash of US$0.3 million. Further, HK$10.41 billion (equivalent to approximately US$1.33 billion) of the revolving credit facility under the 2020 Credit Facilities and HK$1.0 million (equivalent to approximately US$0.1 million) of the revolving credit facility under the 2015 Credit Facilities were available for future drawdown, subject to satisfaction of certain conditions precedent.
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated:
| Three Months Ended March 31, |
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| 2022 | 2021 | |||||||
| (In thousands of US$) | ||||||||
| Net cash used in operating activities |
$ | (148,897 | ) | $ | (94,745 | ) | ||
| Net cash used in investing activities |
(202,599 | ) | (31,222 | ) | ||||
| Net cash provided by financing activities |
170,276 | 6,428 | ||||||
| Effect of exchange rate on cash, cash equivalents and restricted cash |
(3,282 | ) | (2,669 | ) | ||||
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| Decrease in cash, cash equivalents and restricted cash |
(184,502 | ) | (122,208 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period |
886,231 | 894,521 | ||||||
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| Cash, cash equivalents and restricted cash at end of period |
$ | 701,729 | $ | 772,313 | ||||
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Operating Activities
Operating cash flows are generally affected by changes in operating income and accounts receivable related to VIP table games play and hotel operations conducted on a cash and credit basis and the remainder of the business, including mass market table games play, gaming machine play, food and beverage, and entertainment that are conducted primarily on a cash basis.
Net cash used in operating activities was US$148.9 million for the first quarter of 2022, compared to net cash used in operating activities of US$94.7 million for the first quarter of 2021. The change was primarily due to increased working capital used for operations.
Investing Activities
Net cash used in investing activities was US$202.6 million for the first quarter of 2022, compared to US$31.2 million for the first quarter of 2021.The change was primarily due to the funds to an affiliated company.
Net cash used in investing activities of US$202.6 million for the first quarter of 2022 mainly included funds to an affiliated company of US$191.9 million and payments for the acquisition of property and equipment of US$10.8 million.
Net cash used in investing activities of US$31.2 million for the first quarter of 2021 mainly included payments for the acquisition of property and equipment of US$31.5 million.
Payments for the acquisition of property and equipment for the first quarters of 2022 and 2021 were mainly associated with our development projects as well as enhancement to our integrated resort offerings.
Financing Activities
Net cash provided by financing activities amounted to US$170.3 million for the first quarter of 2022, which primarily represented the proceeds from the drawdown of the revolving credit facility under the 2020 Credit Facilities of US$170.0 million.
Net cash provided by financing activities amounted to US$6.4 million for the first quarter of 2021, which primarily represented the proceeds from the issuance of the Additional 2029 Senior Notes of US$258.1 million, which priced at 103.250% of the principal amount, partially offset by the repayment of the outstanding revolving credit facility under the 2020 Credit Facilities of US$249.9 million.
Indebtedness
The following table presents a summary of our gross indebtedness as of March 31, 2022:
| As of March 31, 2022 |
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| (In thousands of US$) | ||||
| 2025 Senior Notes |
$ | 1,000,000 | ||
| 2026 Senior Notes |
$ | 500,000 | ||
| 2027 Senior Notes |
$ | 600,000 | ||
| 2028 Senior Notes |
$ | 850,000 | ||
| 2029 Senior Notes |
$ | 1,150,000 | ||
| 2015 Credit Facilities |
$ | 128 | ||
| 2020 Credit Facilities |
$ | 568,212 | ||
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| $ | 4,668,340 | |||
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On February 23, 2022, MCO Nominee One drew down US$170.0 million under the 2020 Credit Facilities.
On April 6, 2022, MCO Nominee One further drew down US$250.0 million under the 2020 Credit Facilities.
US$340.0 million of the foregoing two drawdowns has been advanced to Melco for working capital and general corporate purposes.
On May 4, 2022, the maturity date of the 2015 Credit Facilities was extended to December 31, 2022 pursuant to an extension request letter.
Recent Developments
Uncertainty around COVID-19 outbreaks and related restrictions continue to have a material effect on our operations, financial position, and future prospects into the second quarter of 2022.
Our operations remain impacted by travel restrictions and quarantine requirements. A series of COVID-19 outbreaks in China in mid-January 2022 led to a tightening of border controls for entry from Guangdong province and a reduction in the validity period of a negative COVID test from 7 days to 48 hours. Shortly thereafter, the validity period was further reduced to 24 hours until the end of January. The validity period increased to 48 hours until mid-March when it was reduced back to 24 hours in response to increasing COVID-19 cases in China. This restriction remained until April 20, 2022, when the Macau government increased the negative COVID test validity period for entry from Guangdong province back up to 48 hours, and then to 72 hours on April 25, 2022.
Uncertainty around COVID-19 outbreaks will continue into 2022 with travel bans or restrictions, visa restrictions and quarantine requirements being key factors impacting 2022 performance. We remain confident in the pent-up demand for Macau as an international tourism destination and believe in a strong recovery once travel restrictions are relaxed.
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Melco Resorts Finance Limited
Index To Unaudited Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2022
| Page | ||||
| Condensed Consolidated Balance Sheets (Unaudited) |
F-2 | |||
| Condensed Consolidated Statements of Operations (Unaudited) |
F-3 | |||
| Condensed Consolidated Statements of Cash Flows (Unaudited) |
F-4 | |||
F-1
Melco Resorts Finance Limited
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except share and per share data)
| March 31, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 701,457 | $ | 885,958 | ||||
| Restricted cash |
272 | 273 | ||||||
| Accounts receivable, net |
49,428 | 49,143 | ||||||
| Receivables from affiliated companies |
720,825 | 675,719 | ||||||
| Inventories |
17,716 | 17,933 | ||||||
| Prepaid expenses and other current assets |
33,202 | 29,405 | ||||||
| Assets held for sale |
5,714 | — | ||||||
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| Total current assets |
1,528,614 | 1,658,431 | ||||||
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| Property and equipment, net |
2,558,666 | 2,636,138 | ||||||
| Gaming subconcession, net |
12,742 | 27,065 | ||||||
| Intangible assets, net |
11,979 | 13,392 | ||||||
| Goodwill |
81,418 | 81,721 | ||||||
| Long-term prepayments, deposits and other assets |
68,287 | 72,513 | ||||||
| Receivables from affiliated companies, non-current |
1,422,039 | 1,255,907 | ||||||
| Operating lease right-of-use assets |
31,325 | 24,748 | ||||||
| Land use rights, net |
287,599 | 291,378 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 6,002,669 | $ | 6,061,293 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDER’S EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 5,227 | $ | 4,498 | ||||
| Accrued expenses and other current liabilities |
525,467 | 610,884 | ||||||
| Income tax payable |
1,024 | 3,001 | ||||||
| Operating lease liabilities, current |
5,844 | 7,599 | ||||||
| Current portion of long-term debt, net |
128 | 128 | ||||||
| Payables to affiliated companies |
84,966 | 95,294 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
622,656 | 721,404 | ||||||
|
|
|
|
|
|||||
| Long-term debt, net |
4,642,312 | 4,472,368 | ||||||
| Other long-term liabilities |
3,263 | 3,504 | ||||||
| Deferred tax liabilities, net |
9,006 | 9,216 | ||||||
| Operating lease liabilities, non-current |
27,232 | 20,333 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
5,304,469 | 5,226,825 | ||||||
|
|
|
|
|
|||||
| Shareholder’s equity: |
||||||||
| Ordinary shares, par value $0.01; 5,000,000 shares authorized; 1,202 shares issued and outstanding |
— | — | ||||||
| Additional paid-in capital |
1,869,226 | 1,863,861 | ||||||
| Accumulated other comprehensive (losses) income |
(12,051 | ) | 5,794 | |||||
| Accumulated losses |
(1,158,975 | ) | (1,035,187 | ) | ||||
|
|
|
|
|
|||||
| Total shareholder’s equity |
698,200 | 834,468 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholder’s equity |
$ | 6,002,669 | $ | 6,061,293 | ||||
|
|
|
|
|
|||||
F-2
Melco Resorts Finance Limited
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands of U.S. dollars)
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Operating revenues: |
||||||||
| Casino |
$ | 322,212 | $ | 379,620 | ||||
| Rooms |
16,619 | 22,836 | ||||||
| Food and beverage |
11,419 | 14,326 | ||||||
| Entertainment, retail and other |
51,451 | 53,378 | ||||||
|
|
|
|
|
|||||
| Total operating revenues |
401,701 | 470,160 | ||||||
|
|
|
|
|
|||||
| Operating costs and expenses: |
||||||||
| Casino |
(269,809 | ) | (344,529 | ) | ||||
| Rooms |
(7,700 | ) | (8,226 | ) | ||||
| Food and beverage |
(13,573 | ) | (14,046 | ) | ||||
| Entertainment, retail and other |
(3,259 | ) | (6,285 | ) | ||||
| General and administrative |
(79,734 | ) | (96,286 | ) | ||||
| Pre-opening costs |
— | (193 | ) | |||||
| Amortization of gaming subconcession |
(14,254 | ) | (14,342 | ) | ||||
| Amortization of land use rights |
(2,706 | ) | (2,723 | ) | ||||
| Depreciation and amortization |
(69,831 | ) | (64,264 | ) | ||||
| Property charges and other |
(4,358 | ) | (1,468 | ) | ||||
|
|
|
|
|
|||||
| Total operating costs and expenses |
(465,224 | ) | (552,362 | ) | ||||
|
|
|
|
|
|||||
| Operating loss |
(63,523 | ) | (82,202 | ) | ||||
|
|
|
|
|
|||||
| Non-operating income (expenses): |
||||||||
| Interest income |
574 | 958 | ||||||
| Interest expenses, net of amounts capitalized |
(60,253 | ) | (57,725 | ) | ||||
| Other financing costs |
(1,240 | ) | (2,383 | ) | ||||
| Foreign exchange gains (losses), net |
856 | (2,562 | ) | |||||
|
|
|
|
|
|||||
| Total non-operating expenses, net |
(60,063 | ) | (61,712 | ) | ||||
|
|
|
|
|
|||||
| Loss before income tax |
(123,586 | ) | (143,914 | ) | ||||
| Income tax expense |
(202 | ) | (141 | ) | ||||
|
|
|
|
|
|||||
| Net loss |
$ | (123,788 | ) | $ | (144,055 | ) | ||
|
|
|
|
|
|||||
F-3
Melco Resorts Finance Limited
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands of U.S. dollars)
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: |
||||||||
| Net cash used in operating activities |
$ | (148,897 | ) | $ | (94,745 | ) | ||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Funds to an affiliated company |
(191,860 | ) | — | |||||
| Acquisition of property and equipment |
(10,817 | ) | (31,472 | ) | ||||
| Proceeds from sale of property and equipment |
78 | 250 | ||||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(202,599 | ) | (31,222 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Payments of deferred financing costs |
(116 | ) | (1,963 | ) | ||||
| Funds from an affiliated company |
392 | 153 | ||||||
| Proceeds from long-term debt |
170,000 | 258,125 | ||||||
| Principal payments on long-term debt |
— | (249,887 | ) | |||||
|
|
|
|
|
|||||
| Net cash provided by financing activities |
170,276 | 6,428 | ||||||
|
|
|
|
|
|||||
| Effect of exchange rate on cash, cash equivalents and restricted cash |
(3,282 | ) | (2,669 | ) | ||||
|
|
|
|
|
|||||
| Decrease in cash, cash equivalents and restricted cash |
(184,502 | ) | (122,208 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period |
886,231 | 894,521 | ||||||
|
|
|
|
|
|||||
| Cash, cash equivalents and restricted cash at end of period |
$ | 701,729 | $ | 772,313 | ||||
|
|
|
|
|
|||||
| Supplemental cash flow disclosures: |
||||||||
| Cash paid for interest, net of amounts capitalized |
$ | (42,660 | ) | $ | (41,825 | ) | ||
| Cash paid for income taxes |
$ | (2,354 | ) | $ | (2,367 | ) | ||
| Cash paid for amounts included in the measurement of lease liabilities - operating cash flows from operating leases |
$ | (3,466 | ) | $ | (3,838 | ) | ||
| Change in operating lease liabilities arising from obtaining operating lease right-of-use assets and lease modification |
$ | 8,433 | $ | 9,137 | ||||
| Change in accrued expenses and other current liabilities related to acquisition of property and equipment |
$ | 2,312 | $ | 15,184 | ||||
|
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
|
| |||||||
| March 31, 2022 |
December 31, 2021 | |||||||
| Cash and cash equivalents |
$ | 701,457 | $ | 885,958 | ||||
| Current portion of restricted cash |
272 | 273 | ||||||
|
|
|
|
|
|||||
| Total cash, cash equivalents and restricted cash |
$ | 701,729 | $ | 886,231 | ||||
|
|
|
|
|
|||||
F-4