| LONG-TERM DEBT | 11. LONG-TERM DEBT
Long-term debt consisted of the following:
December 31,
2015 2014
Studio City Project Facility $ 1,295,689 $ 1,295,689
2013 Senior Notes 1,000,000 1,000,000
Studio City Notes 825,000 825,000
2015 Credit Facilities 501,285
—
Philippine Notes 318,026 336,195
Aircraft Term Loan 22,705 28,731
2011 Credit Facilities
— 417,166
3,962,705 3,902,781
Current portion of long-term debt (106,505 ) (262,750 )
$ 3,856,200 $ 3,640,031
2011 Credit Facilities
On June 22, 2011, Melco Crown Macau (the
“Borrower”) entered into an amendment and restatement
agreement (the “2011 Credit Facilities”), which was
further amended on June 29, 2015 pursuant to a second
amendment and restatement agreement dated June 19, 2015 (and
defined as the “2015 Credit Facilities”) as described
below, with certain lenders in respect of a senior secured credit
facility (the “City of Dreams Project Facility”). The
City of Dreams Project Facility was originally entered on
September 5, 2007 (and was subsequently amended from time to
time) in an aggregate amount of $1,750,000 to fund the City of
Dreams project, construction of an integrated entertainment resort
complex in Macau. The City of Dreams Project Facility consisted of
a $1,500,000 term loan facility (the “Term Loan
Facility”) and a $250,000 revolving credit facility (the
“Revolving Credit Facility”).
On June 30, 2011, the 2011 Credit Facilities, which was
subsequently amended from time to time, became effective and among
other things: (i) reduced the Term Loan Facility to
HK$6,241,440,000 (equivalent to $802,241) (the “2011 Term
Loan Facility”) and increased the Revolving Credit Facility
to HK$3,120,720,000 (equivalent to $401,121) (the “2011
Revolving Credit Facility”), both of which were denominated
in Hong Kong dollars; (ii) introduced new lenders and removed
certain lenders originally under the City of Dreams Project
Facility; (iii) extended the repayment maturity date;
(iv) reduced and removed certain restrictions imposed by the
covenants in the City of Dreams Project Facility; and
(v) removed one of the Borrower’s subsidiaries which was
subsequently dissolved on May 31, 2012, from the borrowing
group which included the Borrower and certain of its affiliates and
subsidiaries as defined under the City of Dreams Project Facility
(the “2011 Borrowing Group”).
The 2011 Credit Facilities would have matured on June 30,
2016. The 2011 Term Loan Facility was subject to quarterly
amortization payments commencing on September 30, 2013. Each
loan made under the 2011 Revolving Credit Facility would have been
repaid in full on the last day of an agreed upon interest period in
respect of the loan, generally ranging from one to six months, or
rolling over subject to compliance with certain covenants and
satisfaction of conditions precedent. The Borrower had the option
to make voluntary prepayments with a minimum amount required in
respect of the 2011 Credit Facilities, plus any applicable break
costs. The Borrower was also subject to mandatory prepayment
requirements in respect of various amounts within the 2011
Borrowing Group, including but not limited to: (i) the net
proceeds received by any member of the 2011 Borrowing Group in
respect of the compulsory transfer, seizure or acquisition by any
governmental authority of the assets of any member of the 2011
Borrowing Group, subject to certain exceptions; (ii) the net
proceeds in excess of a required amount under the 2011 Credit
Facilities of certain asset sales, subject to reinvestment rights
and certain exceptions; (iii) net termination, claim or
settlement proceeds paid under the Borrower’s subconcession
or the 2011 Borrowing Group’s land concessions, subject to
certain exceptions; (iv) insurance proceeds net of expenses to
obtain such proceeds under the property insurances relating to the
total loss of all or substantially all of the Altira Macau gaming
business; and (v) other insurance proceeds net of expenses in
excess of a required amount under the 2011 Credit Facilities to
obtain such proceeds under any property insurances, subject to
reinvestment rights and certain exceptions.
Drawdowns on the 2011 Term Loan Facility were subject to
satisfaction of conditions precedent specified in the 2011 Credit
Facilities and the 2011 Revolving Credit Facility was to be made
available on a fully revolving basis to the date that was one month
prior to the 2011 Revolving Credit Facility’s final maturity
date.
The indebtedness under the 2011 Credit Facilities was guaranteed by
the 2011 Borrowing Group, which applied until the 2011 Credit
Facilities was amended on June 29, 2015. Security for the 2011
Credit Facilities included: a first priority mortgage over all land
where Altira Macau and City of Dreams are located, such mortgages
also covered all present and any future buildings on, and fixtures
to, the relevant land; an assignment of any land use rights under
land concession agreements, leases or equivalents; charges over the
bank accounts in respect of the 2011 Borrowing Group, subject to
certain exceptions; assignment of the rights under certain
insurance policies; first priority security over the chattels,
receivables and other assets of the 2011 Borrowing Group which were
not subject to any security under any other security documentation;
first priority charges over the issued share capital of the 2011
Borrowing Group and equipment and tools used in the gaming business
by the 2011 Borrowing Group; as well as other customary
security.
The 2011 Credit Facilities contained certain covenants customary
for such financings including, but not limited to: limitations on
(i) incurring additional liens; (ii) incurring additional
indebtedness (including guarantees); (iii) making certain
investments; (iv) paying dividends and other restricted
payments; (v) creating any subsidiaries; (vi) selling
assets; and (vii) entering into any contracts for the
construction or financing of an additional hotel tower in
connection with the development of City of Dreams except with plans
approved by the lenders in accordance with the terms of the 2011
Credit Facilities. The 2011 Credit Facilities removed the financial
covenants under the City of Dreams Project Facility, and replaced
them with, without limitation, a leverage ratio, total leverage
ratio and interest cover ratio. The first test date of the
financial covenants was September 30, 2011. As of
December 31, 2014, management believes that the 2011 Borrowing
Group was in compliance with each of the financial restrictions and
requirements.
There were provisions that limited or prohibited certain payments
of dividends and other distributions by the 2011 Borrowing Group to
companies or persons who were not members of the 2011 Borrowing
Group (described in further detail in Note 19). As of
December 31, 2014, the net assets of the 2011 Borrowing Group
of approximately $3,559,000 were restricted from being distributed
under the terms of the 2011 Credit Facilities.
Borrowings under the 2011 Credit Facilities bore interest at Hong
Kong Interbank Offered Rate (“HIBOR”) plus a margin
ranging from 1.75% to 2.75% per annum as adjusted in
accordance with the leverage ratio in respect of the 2011 Borrowing
Group. The Borrower had the option to select an interest period for
borrowings under the 2011 Credit Facilities of one, two, three or
six months or any other agreed period. The Borrower was obligated
to pay a commitment fee quarterly in arrears from June 30,
2011 on the undrawn amount of the 2011 Revolving Credit Facility
throughout the availability period. Loan commitment fees on the
2011 Credit Facilities amounting to $1,385, $2,808 and $2,453 were
recognized during the years ended December 31, 2015, 2014 and
2013, respectively.
During the years ended December 31, 2015 and 2014, the
Borrower repaid HK$499,315,200 (equivalent to $64,179) and
HK$1,997,260,800 (equivalent to $256,717), respectively, under the
2011 Term Loan Facility according to the quarterly amortization
schedule which commenced on September 30, 2013, and the
Borrower had no drawdown on the 2011 Revolving Credit Facility.
Immediately before the amendment of the 2011 Credit Facilities on
June 29, 2015, the Borrower had total outstanding borrowings
of HK$2,746,233,600 (equivalent to $352,987) under the 2011 Credit
Facilities and the Borrower made voluntary repayments to repay the
entire outstanding balance under the 2011 Credit Facilities with
part of the proceeds of the drawdown from the 2015 Credit
Facilities as described below. As of December 31, 2014, the
2011 Term Loan Facility had been fully drawn down while the entire
2011 Revolving Credit Facility of HK$3,120,720,000 (equivalent to
$401,121) remained available for future drawdown, and accordingly,
the Borrower had total outstanding borrowings of HK$3,245,548,800
(equivalent to $417,166) under the 2011 Credit Facilities.
2015 Credit Facilities
On June 29, 2015, the 2011 Credit Facilities were further
amended pursuant to a second amendment and restatement agreement
(the “2015 Credit Facilities”) entered into by, among
others, the Borrower and certain lenders in respect of the 2011
Credit Facilities, on June 19, 2015. The 2015 Credit
Facilities, among other things: (i) increased the size of the
total available facilities from HK$9,362,160,000 (equivalent to
$1,203,362) to HK$13,650,000,000 (equivalent to $1,750,000 based on
exchange rate on transaction date), comprising a HK$3,900,000,000
(equivalent to $500,000 based on exchange rate on transaction date)
term loan facility (the “2015 Term Loan Facility”) and
a HK$9,750,000,000 (equivalent to $1,250,000 based on exchange rate
on transaction date) multicurrency revolving credit facility (the
“2015 Revolving Credit Facility”). In addition, the
2015 Credit Facilities provide for additional incremental
facilities to be made available, upon further agreement with any of
the existing lenders under the 2015 Credit Facilities or other
entities, of up to $1,300,000 (the “2015 Incremental
Facility”); (ii) introduced new lenders and removed
certain lenders originally under the 2011 Credit Facilities;
(iii) extended the repayment maturity date; and
(iv) reduced and removed certain restrictions imposed by the
covenants in the 2011 Credit Facilities, including but not limited
to, increased flexibility to move cash within borrowing group as
defined under the 2015 Credit Facilities (the “2015 Borrowing
Group”), lower covenant levels and reduced reporting
requirements.
The final maturity date of the 2015 Credit Facilities is:
(i) June 29, 2021 in respect of the 2015 Term Loan
Facility; and (ii) June 29, 2020 in respect of the 2015
Revolving Credit Facility, or if earlier, the date of repayment,
prepayment or cancellation in full of the 2015 Credit Facilities.
The maturity date, amount, margin, currency, form and other terms
of the 2015 Incremental Facility will be further specified and
agreed by the Borrower and the lenders under the 2015 Credit
Facilities and additional lenders, if any, upon drawdown on the
2015 Incremental Facility. The 2015 Term Loan Facility is repayable
in quarterly instalments according to an amortization schedule
commencing on September 29, 2016. Each loan made under the
2015 Revolving Credit Facility is repayable in full on the last day
of an agreed upon interest period in respect of the loan, generally
ranging from one to six months, or rolling over subject to
compliance with certain covenants and satisfaction of conditions
precedent. The Borrower may make voluntary prepayments in respect
of the 2015 Credit Facilities in a minimum amount of HK$160,000,000
(equivalent to $20,566), plus the amount of any applicable break
costs. The Borrower is also subject to mandatory prepayment
requirements in respect of various amounts within the 2015
Borrowing Group, including but not limited to: (i) net
termination, claim or settlement proceeds paid under the
Borrower’s subconcession or the 2015 Borrowing Group’s
land concessions, subject to certain exceptions;
(ii) insurance proceeds net of expenses to obtain such
proceeds under the property insurances relating to the total loss
of all or substantially all of the Altira Macau gaming business;
and (iii) other insurance proceeds net of expenses to obtain
such proceeds under any property insurances, subject to
reinvestment rights and certain exceptions, which are in excess of
$50,000. In addition, upon the occurrence of a “Change of
Control” as defined under the 2015 Credit Facilities, any
lender under the 2015 Credit Facilities may, with 20 business
days’ notice, cancel their commitment and request repayment
in full of the 2015 Credit Facilities; and upon the occurrence of
the disposal of all or substantially all of the business and assets
of the 2015 Borrowing Group, comprised in any of the Altira Macau
or the City of Dreams gaming business, the whole of the 2015 Credit
Facilities will be cancelled and all amounts outstanding thereunder
will become immediately due and payable.
Drawdowns on the 2015 Term Loan Facility are subject to
satisfaction of conditions precedent specified in the 2015 Credit
Facilities and the 2015 Revolving Credit Facility is available on a
fully revolving basis up to the date that is one month prior to the
2015 Revolving Credit Facility’s final maturity date. On
June 29, 2015, the 2015 Term Loan Facility of HK$3,900,000,000
(equivalent to $500,000 based on exchange rate on transaction date)
was fully drawn down and the availability period for this facility
has expired. The Borrower has no drawdown on the 2015 Revolving
Credit Facility and 2015 Incremental Facility during the year ended
December 31, 2015.
The indebtedness under the 2015 Credit Facilities is guaranteed by
the 2015 Borrowing Group, which applied on and from June 29,
2015. Security for the 2015 Credit Facilities remains the same as
the 2011 Credit Facilities (except that the terms of the associated
security documents have been amended for consistency with the 2015
Credit Facilities).
The 2015 Credit Facilities contains certain covenants customary for
such financings including, but not limited to: the 2015 Borrowing
Group’s limitations on, except as permitted under the 2015
Credit Facilities (i) incurring additional liens;
(ii) incurring additional indebtedness (including guarantees);
(iii) making certain investments; (iv) paying dividends
and other restricted payments; (v) creating any subsidiaries;
and (vi) selling assets. The financial covenants under the
2015 Credit Facilities remain the same as the 2011 Credit
Facilities, including a leverage ratio, total leverage ratio and
interest cover ratio but with lower covenant levels. The first test
date of the financial covenants was September 30, 2015. As of
December 31, 2015, management believes that the 2015 Borrowing
Group was in compliance with each of the financial restrictions and
requirements.
There are provisions that limit certain payments of dividends and
other distributions by the 2015 Borrowing Group to companies or
persons who are not members of the 2015 Borrowing Group (described
in further detail in Note 19). As of December 31, 2015, the
net assets of the 2015 Borrowing Group of approximately $3,825,000
were restricted from being distributed under the terms of the 2015
Credit Facilities.
Borrowings under the 2015 Credit Facilities bear an initial
interest for the six months from June 29, 2015 at HIBOR plus a
margin of 1.75% per annum. Subsequent to that, borrowings
under the 2015 Credit Facilities bear interest at HIBOR plus a
margin ranging from 1.25% to 2.50% per annum as adjusted in
accordance with the leverage ratio in respect of the 2015 Borrowing
Group. The Borrower may select an interest period for borrowings
under the 2015 Credit Facilities of one, two, three or six months
or any other agreed period. The Borrower is obligated to pay a
commitment fee quarterly in arrears from July 13, 2015 on the
undrawn amount of the 2015 Revolving Credit Facility throughout the
availability period. Loan commitment fees on the 2015 Credit
Facilities amounting to $3,100 were recognized during the year
ended December 31, 2015.
As of December 31, 2015, the Borrower had total outstanding
borrowings relating to the 2015 Credit Facilities of
HK$3,900,000,000 (equivalent to $501,285). The entire 2015
Revolving Credit Facility of HK$9,750,000,000 (equivalent to
$1,250,000 based on exchange rate on transaction date) remains
available for future drawdown.
In accordance with the applicable accounting standards, the
Borrower recorded a $481 loss on extinguishment of debt in the
consolidated statements of operations for the year ended
December 31, 2015 which represented the write off of a portion
of unamortized deferred financing costs associated with the 2011
Credit Facilities and recorded $592 costs associated with debt
modification in the consolidated statements of operations for the
year ended December 31, 2015 which represented the portion of
the third party costs in relation to the 2015 Credit Facilities.
The upfront fee and the remaining portion of third party costs of
$46,507 were capitalized as deferred financing costs.
2010 Senior Notes
On May 17, 2010, MCE Finance Limited (“MCE
Finance”), a subsidiary of the Company, issued and listed the
$600,000 10.25% senior notes, due 2018 (the “2010 Senior
Notes”) on the Official List of Singapore Exchange Securities
Trading Limited (“SGX-ST”). The purchase price paid by
the initial purchasers was 98.671% of the principal amount. The
2010 Senior Notes were general obligations of MCE Finance, secured
by a first-priority pledge of the intercompany note representing
the on-lending of the gross proceeds from the issuance of the 2010
Senior Notes by MCE Finance to a subsidiary of MCE Finance to
reduce the indebtedness under the City of Dreams Project Facility,
ranked equally in right of payment to all existing and future
senior indebtedness of MCE Finance and ranked senior in right of
payment to any existing and future subordinated indebtedness of MCE
Finance. The 2010 Senior Notes would have matured on
May 15, 2018. Interest on the 2010 Senior Notes was
accrued at a rate of 10.25% per annum and was payable
semi-annually in arrears on May 15 and November 15 of
each year, commenced on November 15, 2010.
MCE Finance had the option to redeem all or part of the 2010 Senior
Notes at any time prior to May 15, 2014, at a
“make-whole” redemption price. Thereafter, MCE Finance
had the option to redeem all or a portion of the 2010 Senior Notes
at any time at fixed redemption prices that declined ratably over
time.
Prior to May 15, 2013, MCE Finance had the option to redeem up
to 35% of the 2010 Senior Notes with the net cash proceeds from one
or more certain equity offerings at a fixed redemption price. In
addition, under certain circumstances and subject to certain
exceptions as more fully described in the indenture, MCE Finance
also had the option to redeem in whole, but not in part the 2010
Senior Notes at fixed redemption prices.
The indenture governing the 2010 Senior Notes contained certain
covenants that, subject to certain exceptions and conditions,
limited the ability of MCE Finance and its restricted subsidiaries
to, among other things: (i) incur or guarantee additional
indebtedness; (ii) make specified restricted payments;
(iii) issue or sell capital stock; (iv) sell assets;
(v) create liens; (vi) enter into agreements that
restrict the restricted subsidiaries’ ability to pay
dividends, transfer assets or make intercompany loans;
(vii) enter into transactions with shareholders or affiliates;
and (viii) effect a consolidation or merger.
There were provisions under the indenture of the 2010 Senior Notes
that limited or prohibited certain payments of dividends and other
distributions by MCE Finance and its respective restricted
subsidiaries to companies or persons who were not MCE Finance or
members of MCE Finance respective restricted subsidiaries, subject
to certain exceptions and conditions (described in further detail
in Note 19).
On October 30, 2012, MCE Finance received unrevoked consents
from the holders (the “Holders”) of the requisite
aggregate principal amount of the 2010 Senior Notes necessary to
approve certain proposed amendments to, among other things, allowed
MCE Finance to (i) make an additional $400,000 of restricted
payments to fund the Studio City project and (ii) have the
flexibility to transact with, and use any revenues or other
payments generated or derived from, certain projects and to provide
for certain other technical amendments (the “Proposed
Amendments”) to the indenture governing the 2010 Senior Notes
and executed a supplemental indenture to give effect to the
Proposed Amendments. The Group capitalized the payments to the
agent and Holders who had validly delivered a consent to the
Proposed Amendments totaling $14,795 as deferred financing costs
and expensed the third party fee of $3,277 as a result of the
aforementioned debt modification.
On January 28, 2013, MCE Finance made a cash tender offer to
repurchase the 2010 Senior Notes at a cash consideration plus
accrued interest and also solicited consents to amend the terms of
the 2010 Senior Notes to substantially remove the debt incurrence,
restricted payment and other restrictive covenants (the
“Tender Offer”). Closing of the Tender Offer and
consent solicitation were conditioned upon MCE Finance receiving
net proceeds from offering of the 2013 Senior Notes (as described
below) in an amount sufficient to repurchase the tendered 2010
Senior Notes and related fees and expenses and other general
conditions. The Tender Offer expired on February 26, 2013 and
$599,135 aggregate principal amount of the 2010 Senior Notes were
tendered. On February 27, 2013, MCE Finance elected to redeem
the remaining outstanding 2010 Senior Notes in aggregate principal
amount of $865 on March 28, 2013, at a price equal to 100% of
the principal amount outstanding plus applicable premium as of, and
accrued and unpaid interest to March 28, 2013. The accounting
for the total redemption costs of $102,497, unamortized deferred
financing costs of $23,793 and unamortized issue discount of $5,962
in relation to the 2010 Senior Notes as of the redemption date are
disclosed as below under the 2013 Senior Notes.
RMB Bonds
On May 9, 2011, the Company issued and listed the Renminbi
(“RMB”) 2,300,000,000 3.75% bonds due 2013 (the
“RMB Bonds”) (equivalent to $353,278 based on exchange
rate on transaction date) on SGX-ST. The RMB Bonds were priced at
100% at par. The RMB Bonds were direct, general, unconditional,
unsubordinated and unsecured obligations of the Company, which at
all times ranked equally without any preference or priority among
themselves and at least equally with all of the Company’s
other present and future unsecured and unsubordinated obligations,
save for such obligations as may be preferred by provisions of law
that were both mandatory and of general application. The RMB Bonds
would have matured on May 9, 2013 and the interest on the RMB
Bonds was accrued at a rate of 3.75% per annum and was payable
semi-annually in arrears on May 9 and November 9 of each
year, commenced on November 9, 2011.
The Company had the option to redeem in whole, but not in part
under certain circumstances as defined in the indenture, the RMB
Bonds at any time prior to May 9, 2012 at an additional
redemption price. Thereafter, the Company had the option to redeem
in whole, but not in part, the RMB Bonds at any time after
May 9, 2012 at a fixed redemption price.
The indenture governing the RMB Bonds contained certain negative
pledge and financial covenants, providing that the Company should
not create or permit to subsist any security interest upon the
whole or any part of the Company’s present or future
undertaking, assets or revenues to secure any relevant indebtedness
or guarantee of relevant indebtedness without: (i) at the same
time or prior thereto securing the RMB Bonds equally and rateably
therewith to the satisfaction of the trustee under the RMB Bonds;
or (ii) providing such other security for the RMB Bonds as the
trustee may in its absolute discretion consider to be not
materially less beneficial to the interests of the holders of the
RMB Bonds or as may be approved by an extraordinary resolution of
bondholders. In addition, the Company was also required to comply
with certain financial covenants, including maintaining a specified
consolidated tangible net worth and a leverage ratio.
On March 11, 2013, the Company early redeemed the RMB Bonds in
full in aggregate principal amount of RMB2,300,000,000 (equivalent
to $368,177) together with accrued interest, which was partially
funded from net proceeds from offering of the 2013 Senior Notes
(described below). The Group wrote off the unamortized deferred
financing costs of $586 immediately before redemption of the RMB
Bonds as loss on extinguishment of debt in the consolidated
statements of operations for the year ended December 31,
2013.
Deposit-Linked Loan
On May 20, 2011, the Company entered into a Hong Kong dollar
deposit-linked loan facility (the “Deposit-Linked
Loan”) with a lender in an amount of HK$2,748,500,000
(equivalent to $353,278 based on exchange rate on transaction
date), which was secured by a deposit in an amount of
RMB2,300,000,000 (equivalent to $353,278 based on exchange rate on
transaction date) from the proceeds of the RMB Bonds as described
above. The Deposit-Linked Loan would have matured on May 20,
2013 or, if earlier, at any time with 30 days’ prior
notice given to the lender, the Company may prepay the whole or any
part of not less than HK$500,000,000 (equivalent to $64,267) of the
Deposit-Linked Loan outstanding. The Deposit-Linked Loan bore
interest at a rate of 2.88% per annum and was payable
semi-annually in arrears on May 8 and November 8 of each
year, commenced on November 8, 2011.
On March 4, 2013, the Company prepaid in full the
Deposit-Linked Loan in aggregate principal amount of
HK$2,748,500,000 (equivalent to $353,278) with accrued interest and
a deposit in an amount of RMB2,300,000,000 (equivalent to $368,177)
from the proceeds of the RMB Bonds, for security of the
Deposit-Linked Loan, was released on the same date.
Aircraft Term Loan
On June 25, 2012, MCE Transportation Limited (“MCE
Transportation”), a subsidiary of the Company, entered into a
$43,000 term loan facility agreement to partly finance the
acquisition of an aircraft (the “Aircraft Term Loan”).
Principal and interest repayments are payable quarterly in arrears
commenced on September 27, 2012 until maturity on
June 27, 2019, interest is calculated based on London
Interbank Offered Rate plus a margin of 2.80% per annum and
the loan may be prepaid in whole or in part of not less than $1,000
and 10 days’ prior notice given. The Aircraft Term Loan is
guaranteed by the Company and security includes a first-priority
mortgage on the aircraft itself; pledge over the MCE Transportation
bank accounts; assignment of insurances (other than third party
liability insurance); and an assignment of airframe and engine
warranties. The Aircraft Term Loan must be prepaid in full if any
of the following events occurs: (i) a change of control;
(ii) the sale of all or substantially all of the components of
the aircraft; (iii) the loss, damage or destruction of the
entire or substantially the entire aircraft. Other covenants
include lender’s approval for any capital expenditure not
incurred in the ordinary course of business or any subsequent
indebtedness exceeding $1,000 by MCE Transportation. As of
December 31, 2015, the Aircraft Term Loan has been fully drawn
down and utilized with other funds of the Group, to fund the
purchase of the aircraft. As of December 31, 2015 and 2014,
the carrying value of aircraft was $37,559 and $40,974,
respectively.
2013 Senior Notes
On February 7, 2013, MCE Finance issued and listed $1,000,000
5% senior notes, due 2021 (the “2013 Senior Notes”) and
priced at 100% at par on the SGX-ST. The 2013 Senior Notes are
general obligations of MCE Finance, rank equally in right of
payment to all existing and future senior indebtedness of MCE
Finance and rank senior in right of payment to any existing and
future subordinated indebtedness of MCE Finance and effectively
subordinated to all of MCE Finance’s existing and future
secured indebtedness to the extent of the value of the assets
securing such debt. Certain subsidiaries of MCE Finance (the
“2013 Senior Notes Guarantors”) jointly, severally and
unconditionally guarantee the 2013 Senior Notes on a senior basis.
The guarantees are joint and several general obligations of the
2013 Senior Notes Guarantors, rank equally in right of payment with
all existing and future senior indebtedness of the 2013 Senior
Notes Guarantors, and rank senior in right of payment to any
existing and future subordinated indebtedness of the 2013 Senior
Notes Guarantors. The 2013 Senior Notes mature on February 15,
2021. Interest on the 2013 Senior Notes is accrued at a rate of
5% per annum and is payable semi-annually in arrears on
February 15 and August 15 of each year, commenced on
August 15, 2013.
The net proceeds from the offering of the 2013 Senior Notes, after
deducting the underwriting commissions and other expenses of
approximately $14,500, was approximately $985,500. The Group used
part of the net proceeds from the offering to (i) repurchase
in full the 2010 Senior Notes of $600,000 and fund the related
redemption costs of the 2010 Senior Notes of $102,497 and
(ii) for the partial repayment of the RMB Bonds on
March 11, 2013. As a result, in accordance with the applicable
accounting standards, the Group recorded a $50,256 loss on
extinguishment of debt in the consolidated statements of operations
for the year ended December 31, 2013 which comprised the
portion of the redemption costs of $38,949, write off of respective
portion of unamortized deferred financing costs of $9,041 and
unamortized issue discount of $2,266 related to the 2010 Senior
Notes and recorded $10,538 costs associated with debt modification
in the consolidated statements of operations for the year ended
December 31, 2013 which represented the portion of the
underwriting fee and other third party costs incurred in connection
with the issuance of the 2013 Senior Notes. The remaining portion
of the underwriting fee and other third party costs of $6,523 were
capitalized as deferred financing costs.
MCE Finance has the option to redeem all or a portion of the 2013
Senior Notes at any time prior to February 15, 2016, at a
“make-whole” redemption price. Thereafter, MCE Finance
has the option to redeem all or a portion of the 2013 Senior Notes
at any time at fixed redemption prices that decline ratably over
time.
MCE Finance has the option to redeem up to 35% of the 2013 Senior
Notes with the net cash proceeds from one or more certain equity
offerings at a fixed redemption price at any time prior to
February 15, 2016. In addition, under certain circumstances
and subject to certain exceptions as more fully described in the
indenture, MCE Finance also has the option to redeem in whole, but
not in part the 2013 Senior Notes at fixed redemption prices.
The indenture governing the 2013 Senior Notes contains certain
covenants that, subject to certain exceptions and conditions, limit
the ability of MCE Finance and its restricted subsidiaries to,
among other things: (i) incur or guarantee additional
indebtedness; (ii) make specified restricted payments;
(iii) issue or sell capital stock; (iv) sell assets;
(v) create liens; (vi) enter into agreements that
restrict the restricted subsidiaries’ ability to pay
dividends, transfer assets or make intercompany loans;
(vii) enter into transactions with shareholders or affiliates;
and (viii) effect a consolidation or merger. As of
December 31, 2015, management believes that MCE Finance was in
compliance with each of the financial restrictions and
requirements.
There are provisions under the indenture of the 2013 Senior Notes
that limit or prohibit certain payments of dividends and other
distributions by MCE Finance and its restricted subsidiaries to
companies or persons who are not MCE Finance or members of MCE
Finance’s restricted subsidiaries, subject to certain
exceptions and conditions (described in further detail in Note 19).
As of December 31, 2015 and 2014, the net assets of MCE
Finance and its restricted subsidiaries of approximately $3,913,000
and $3,639,000, respectively, were restricted from being
distributed under the terms of the 2013 Senior Notes.
Studio City Notes
On November 26, 2012, Studio City Finance Limited
(“Studio City F |
