| LONG-TERM DEBT, NET | 11.
LONG-TERM DEBT, NET
Long-term debt, net consisted of the following:
December 31,
2018 2017
Credit Facilities
2015 Credit Facilities (net of unamortized deferred financing costs
of $4,428 and $6,919, respectively) $ 1,471,466 $ 426,692
2016 Studio City Credit Facilities 128 129
Aircraft Term Loan 3,503 10,167
Senior Notes
2017 Senior Notes, due 2025 (net of unamortized deferred financing
costs and original issue premiums of $22,904 and $25,821,
respectively) 977,096 974,179
2012 Studio City Notes, due 2020 (net of unamortized deferred
financing costs of $3,436 and $9,747, respectively) 421,564 815,253
2016 7.250% SC Secured Notes, due 2021 (net of unamortized deferred
financing costs of $10,580 and $13,702, respectively) 839,420 836,298
2016 5.875% SC Secured Notes, due 2019 (net of unamortized deferred
financing costs of $2,260 and $4,580, respectively) 347,740 345,420
Philippine Notes, due 2019 (net of unamortized deferred financing
costs of $808)
— 149,424
4,060,917 3,557,562
Current portion of long-term debt (net of unamortized deferred
financing costs of $2,775 and $720, respectively) (395,547 ) (51,032 )
$ 3,665,370 $ 3,506,530
(a) Credit Facilities
2015 Credit Facilities
On June 29, 2015, Melco Resorts Macau (the
“Borrower”) amended and restated the Borrower’s
prior senior secured credit facilities agreement from
HK$9,362,160,000 (equivalent to $1,203,362) to HK$13,650,000,000
(equivalent to $1,750,000 based on the exchange rate on the
transaction date) senior secured credit facilities agreement (the
“2015 Credit Facilities”). The 2015 Credit Facilities,
comprise a HK$3,900,000,000 (equivalent to $500,000 based on the
exchange rate on the transaction date) term loan facility (the
“2015 Term Loan Facility”) and a HK$9,750,000,000
(equivalent to $1,250,000 based on the exchange rate on the
transaction date) multicurrency revolving credit facility (the
“2015 Revolving Credit Facility”). 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”).
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 installments according to an amortization schedule.
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 is also subject
to mandatory prepayment requirements in respect of various amounts
as specified in the 2015 Credit Facilities; in the event of the
disposal of all or substantially all of the business and assets of
the borrowing group which includes the Borrower and certain of its
subsidiaries as defined under the 2015 Credit Facilities (the
“2015 Borrowing Group”), the 2015 Credit Facilities are
required to be repaid in full. In the event of a change of control,
the Borrower may be required, at the election of any lender under
the 2015 Credit Facilities, to repay such lender in full.
As of December 31, 2018, the 2015 Term Loan Facility had been
fully drawn down with an outstanding amount of HK$3,022,500,000
(equivalent to $385,940). On June 8, 2017, part of the 2015
Revolving Credit Facility of HK$2,723,000,000 (equivalent to
$350,000) was drawn down and used to partly fund Melco Resorts
Finance Limited (“Melco Resorts Finance”), a subsidiary
of the Company, for the redemption of the 2013 Senior Notes (as
described below) on June 14, 2017. On July 3, 2017, Melco
Resorts Finance completed the issuance of the Second 2017 Senior
Notes at a principal amount of $350,000 (priced at 100.75%) (as
described below), of which part of the net proceeds were used to
repay in full the drawn 2015 Revolving Credit Facility of
HK$2,723,000,000 (equivalent to $350,000) on July 10, 2017.
During the year ended December 31, 2018, part of the 2015
Revolving Credit Facility of HK$8,536,000,000 (equivalent to
$1,095,714) was drawn down. The 2015 Revolving Credit Facility of
HK$1,214,000,000 (equivalent to $155,014) remains available for
future drawdown as of December 31, 2018.
The indebtedness under the 2015 Credit Facilities is guaranteed by
the 2015 Borrowing Group. Security for the 2015 Credit Facilities
includes: a first-priority interest in substantially all assets of
the 2015 Borrowing Group, the issued share capital and equity
interests and certain buildings, fixtures and equipment of the 2015
Borrowing Group and certain other excluded assets and customary
security.
The 2015 Credit Facilities contain certain covenants customary for
such financings including, but not limited to: the 2015 Borrowing
Group’s limitations on, except as permitted
(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 2015 Credit Facilities also contains conditions and
events of default customary for such financings and the financial
covenants including a leverage ratio, total leverage ratio and
interest cover ratio.
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. As of
December 31, 2018, there were no material net assets of the
2015 Borrowing Group restricted from being distributed under the
terms of the 2015 Credit Facilities as certain financial tests and
conditions are satisfied.
Borrowings under the 2015 Credit Facilities bear interest at Hong
Kong Interbank Offered Rate (“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 ranging from one to six months or any other
agreed period. The Borrower is obligated to pay a commitment fee on
the undrawn amount of the 2015 Revolving Credit Facility and
recognized loan commitment fees on the 2015 Credit Facilities of
$3,870, $4,819 and $4,800 during the years ended December 31,
2018, 2017 and 2016, respectively.
2016 Studio City Credit Facilities
On November 30, 2016, the Studio City Company Limited
(“Studio City Company” or the “Studio City
Borrower”), a majority-owned subsidiary of the Company,
amended and restated the Studio City Borrower’s prior senior
secured credit facilities agreement from HK$10,855,880,000
(equivalent to $1,395,357) to HK$234,000,000 (equivalent to
$30,077) senior secured credit facilities agreement (the
“2016 Studio City Credit Facilities”), comprising a
HK$1,000,000 (equivalent to $129) term loan facility (the
“2016 SC Term Loan Facility”) and a HK$233,000,000
(equivalent to $29,948) revolving credit facility (the “2016
SC Revolving Credit Facility”). The Group recorded a loss on
extinguishment of debt of $17,435 and costs associated with debt
modification of $8,101 during the year ended December 31, 2016
in connection with such amendments. As of December 31, 2018,
the 2016 SC Term Loan Facility had been fully drawn down with an
outstanding amount of HK$1,000,000 (equivalent to $128), and the
entire 2016 SC Revolving Credit Facility of HK$233,000,000
(equivalent to $29,752) remains available for future drawdown as of
December 31, 2018.
The 2016 SC Term Loan Facility and the 2016 SC Revolving Credit
Facility mature on November 30, 2021 (December 1, 2021 Hong
Kong time). The 2016 SC Term Loan Facility has to be repaid at
maturity with no interim amortization payments. The 2016 SC
Revolving Credit Facility is available from January 1, 2017 up
to the date that is one month prior to the 2016 SC Revolving Credit
Facility’s final maturity date. The 2016 SC Term Loan
Facility is collateralized by cash collateral equal to HK$1,012,500
(equivalent to $129) (representing the principal amount of the 2016
SC Term Loan Facility plus expected interest expense in respect of
the 2016 SC Term Loan Facility for one financial quarter). The
Studio City Borrower is subject to mandatory prepayment
requirements in respect of various amounts of the 2016 SC Revolving
Credit Facility as specified in the 2016 Studio City Credit
Facilities; in the event of the disposal of all or substantially
all of the business and assets of the Studio City borrowing group
which includes the Studio City Borrower and certain of its
subsidiaries as defined under the 2016 Studio City Credit
Facilities (the “2016 Studio City Borrowing Group”),
the 2016 Studio City Credit Facilities are required to be repaid in
full. In the event of a change of control, the Studio City Borrower
may be required, at the election of any lender under the 2016
Studio City Credit Facilities, to repay such lender in full (other
than the principal amount of the 2016 SC Term Loan Facility).
The indebtedness under the 2016 Studio City Credit Facilities is
guaranteed by Studio City Investments and its subsidiaries (other
than the Studio City Borrower). Security for the 2016 Studio City
Credit Facilities includes a first-priority mortgage over any
rights under the land concession contract of Studio City and an
assignment of certain leases or rights to use agreements; as well
as other customary security. The 2016 Studio City Credit Facilities
contain certain affirmative and negative covenants customary for
such financings, as well as affirmative, negative and financial
covenants equivalent to those contained in the 2016 Studio City
Secured Notes. All bank accounts of Melco Resorts Macau related
solely to the operations of the Studio City gaming area are pledged
under 2016 Studio City Credit Facilities and related finance
documents. The 2016 Studio City Credit Facilities are secured, on
an equal basis with the 2016 Studio City Secured Notes (as
described below), by substantially all of the material assets of
Studio City Investments and its subsidiaries (although obligations
under the 2016 Studio City Credit Facilities that are secured by
common collateral securing the 2016 Studio City Secured Notes will
have priority over the 2016 Studio City Secured Notes with respect
to any proceeds received upon any enforcement action of such common
collateral).
The 2016 Studio City Credit Facilities contain certain covenants
that, subject to certain exceptions and conditions, limit the
ability of Studio City Company, Studio City Investments and their
respective restricted subsidiaries to, among other things:
(i) incur or guarantee additional indebtedness and issue
certain preferred stock; (ii) make specified restricted
payments (including dividends and distribution with respect to
shares of Studio City Company) and investments; (iii) prepay
or redeem subordinated debt or equity and make payments of
principal of the 2012 Studio City Notes; (iv) issue or sell
capital stock; (v) transfer, lease or sell assets;
(vi) create or incur certain liens; (vii) impair the
security interests in the Collateral as defined below;
(viii) enter into agreements that restrict the restricted
subsidiaries’ ability to pay dividends, transfer assets or
make intercompany loans; (ix) change the nature of the
business of the relevant group; (x) enter into transactions
with shareholders or affiliates; and (xi) effect a
consolidation or merger. The 2016 Studio City Credit Facilities
also contains conditions and events of default customary for such
financings.
There are provisions that limit certain payments of dividends and
other distributions by the 2016 Studio City Borrowing Group to
companies or persons who are not members of the 2016 Studio City
Borrowing Group. As of December 31, 2018, the net assets of
Studio City Investments and its restricted subsidiaries of
approximately $1,044,000 were restricted from being distributed
under the terms of the 2016 Studio City Credit Facilities.
Borrowings under the 2016 Studio City Credit Facilities bear
interest at HIBOR plus a margin of 4% per annum. The Studio City
Borrower may select an interest period for borrowings under the
2016 Studio City Credit Facilities ranging from one to six months
or any other agreed period. The Studio City Borrower is obligated
to pay a commitment fee from January 1, 2017 on the undrawn
amount of the 2016 SC Revolving Credit Facility and recognized loan
commitment fees on the 2016 SC Revolving Credit Facility of $419
and $419 during the years ended December 31, 2018 and 2017,
respectively.
Philippine Credit Facility
On October 14, 2015, Melco Resorts and Entertainment
(Philippines) Corporation (“MRP”), a majority-owned
subsidiary of the Company, with its common shares listed on the
Philippine Stock Exchange, Inc. (the “PSE”) until its
trading suspension on December 10, 2018 with details as
disclosed in Note 24, entered into
an on-demand, “PDST-R2”) PDST-R2 gross-up
As of December 31, 2018 and 2017, the Philippine Credit
Facility has not been drawn.
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
until maturity on June 27, 2019, interest is calculated based
on London Interbank Offered Rate plus a margin of 2.80% per annum.
The Aircraft Term Loan is guaranteed by the Company and security
includes a first-priority mortgage on the aircraft itself; pledge
over the bank accounts of MCE Transportation; 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 certain amount by
MCE Transportation. As of December 31, 2018, the Aircraft Term
Loan has been fully drawn down and the carrying value of aircraft
was $20,091.
(b) Senior Notes
2013 Senior Notes
On February 7, 2013, Melco Resorts Finance issued $1,000,000
in aggregate principal amount of 5% senior notes due 2021 and
priced at 100% (the “2013 Senior Notes”). On
June 6, 2017, Melco Resorts Finance completed the issuance of
the First 2017 Senior Notes at a principal amount of $650,000 (as
described below). On June 14, 2017, together with the net
proceeds from the issuance of the First 2017 Senior Notes along
with the proceeds in the amount of $350,000 from a partial drawdown
of the 2015 Revolving Credit Facility under the 2015 Credit
Facilities and cash on hand, Melco Resorts Finance redeemed all of
its outstanding 2013 Senior Notes. The 2013 Senior Notes would have
matured on February 15, 2021 and the interest on the 2013
Senior Notes was accrued at a rate of 5% per annum, payable
semi-annually in arrears on February 15 and August 15 of
each year. As a result of the refinancing of the 2013 Senior Notes,
the Group recorded a $48,398 loss on extinguishment of debt and a
$2,793 cost associated with debt modification during the year ended
December 31, 2017.
2017 Senior Notes
On June 6, 2017, Melco Resorts Finance issued $650,000 in
aggregate principal amount of 4.875% senior notes due 2025 and
priced at 100% (the “First 2017 Senior Notes”); and on
July 3, 2017, Melco Resorts Finance further issued $350,000 in
aggregate principal amount of 4.875% senior notes due 2025 and
priced at 100.75% (the “Second 2017 Senior Notes” and
together with the First 2017 Senior Notes, collectively referred to
as the “2017 Senior Notes”). The 2017 Senior Notes
mature on June 6, 2025 and the interest on the 2017 Senior
Notes is accrued at a rate of 4.875% per annum, payable
semi-annually in arrears on June 6 and December 6 of each
year, commenced on December 6, 2017. The 2017 Senior Notes are
general obligations of Melco Resorts Finance, rank equally in right
of payment to all existing and future senior indebtedness of Melco
Resorts Finance and rank senior in right of payment to any existing
and future subordinated indebtedness of Melco Resorts Finance and
effectively subordinated to all of Melco Resorts Finance’s
existing and future secured indebtedness to the extent of the value
of the assets securing such debt and all of the indebtedness of
Melco Resorts Finance’s subsidiaries.
The Group used the net proceeds from the offering of the First 2017
Senior Notes to partly fund the redemption of the 2013 Senior Notes
on June 14, 2017 and used the net proceeds from the offering
of the Second 2017 Senior Notes to fund the repayment of the 2015
Revolving Credit Facility on July 10, 2017 (the drawdown of
the 2015 Revolving Credit Facility was used to partly fund the
redemption of the 2013 Senior Notes as described above).
Melco Resorts Finance has the option to redeem all or a portion of
the 2017 Senior Notes at any time prior to June 6, 2020, at a
“make-whole” redemption price. On or after June 6,
2020, Melco Resorts Finance has the option to redeem all or a
portion of the 2017 Senior Notes at any time at fixed redemption
prices that decline ratably over time. In addition, Melco Resorts
Finance has the option to redeem up to 35% of the 2017 Senior Notes
with the net cash proceeds from one or more equity offerings at a
fixed redemption price at any time prior to June 6, 2020.
Further, under certain circumstances and subject to certain
exceptions as more fully described in the indenture, Melco Resorts
Finance also has the option to redeem in whole, but not in part the
2017 Senior Notes at fixed redemption prices. In certain events
that relate to the gaming subconcession of Melco Resorts Macau and
subject to certain exceptions as more fully described in the
indenture, each holder of the 2017 Senior Notes will have the right
to require Melco Resorts Finance to repurchase all or any part of
such holder’s 2017 Senior Notes at a fixed redemption
price.
The indenture governing the 2017 Senior Notes contains certain
covenants that, subject to certain exceptions and conditions, limit
the ability of Melco Resorts Finance to, among other things, effect
a consolidation or merger or sell assets. The indenture governing
the 2017 Senior Notes also contains conditions and events of
default customary for such financings.
2012 Studio City Notes
On November 26, 2012, Studio City Finance Limited
(“Studio City Finance”), a majority-owned subsidiary of
the Company, issued $825,000 in aggregate principal amount of 8.5%
senior notes due 2020 and priced at 100% (the “2012 Studio
City Notes”). Studio City Finance used the net proceeds from
the offering to fund the Studio City project with conditions and
sequence for disbursements in accordance with an agreement. On
December 31, 2018, Studio City Finance partially redeemed the
2012 Studio City Notes in aggregate principal amount of $400,000 at
a price of 100%, together with accrued interest. The Group recorded
a loss on extinguishment of debt of $3,233 during the year ended
December 31, 2018 in connection with this redemption.
On January 22, 2019, Studio City Finance initiated a
conditional tender offer to purchase the outstanding balance of
2012 Studio City Notes in aggregate principal amount of $425,000,
with $216,534 aggregated principal amount of the 2012 Studio City
Notes tendered on February 4, 2019, and the remaining
outstanding 2012 Studio City Notes in aggregate principal amount of
$208,466 were redeemed in full on March 13, 2019. Further
details are disclosed in Note 25.
The 2012 Studio City Notes would have matured on December 1,
2020 and the interest on the 2012 Studio City Notes was accrued at
a rate of 8.5% per annum, payable semi-annually in arrears on
June 1 and December 1 of each year. The 2012 Studio City
Notes were general obligations of Studio City Finance, secured by a
first-priority security interest in certain specified bank accounts
incidental to the 2012 Studio City Notes and a pledge of certain
intercompany loans as defined under the 2012 Studio City Notes,
ranked equally in right of payment to all existing and future
senior indebtedness of Studio City Finance and ranked senior in
right of payment to any existing and future subordinated
indebtedness of Studio City Finance. The 2012 Studio City Notes
were effectively subordinated to all of Studio City Finance’s
existing and future secured indebtedness to the extent of the value
of the property and assets securing such indebtedness.
All of the existing subsidiaries of Studio City Finance and any
other future restricted subsidiaries that provided guarantees of
certain specified indebtedness (including the 2016 Studio City
Credit Facilities (as described below)) (the “2012 Studio
City Notes Guarantors”) jointly, severally and
unconditionally guaranteed the 2012 Studio City Notes on a senior
basis (the “2012 Studio City Notes Guarantees”). The
2012 Studio City Notes Guarantees were general obligations of the
2012 Studio City Notes Guarantors, ranked equally in right of
payment with all existing and future senior indebtedness of the
2012 Studio City Notes Guarantors and ranked senior in right of
payment to any existing and future subordinated indebtedness of the
2012 Studio City Notes Guarantors. The 2012 Studio City Notes
Guarantees were effectively subordinated to the 2012 Studio City
Notes Guarantors’ obligations under the 2016 Studio City
Credit Facilities and the 2016 Studio City Secured Notes (as
described below) and any future secured indebtedness that was
secured by property and assets of the 2012 Studio City Notes
Guarantors to the extent of the value of such property and
assets.
At any time on or after December 1, 2015, Studio City Finance
had the option to redeem all or a portion of the 2012 Studio City
Notes at any time at fixed redemption prices that declined ratably
over time and also had the option to redeem in whole, but not in
part the 2012 Studio City Notes at fixed redemption prices under
certain circumstances and subject to certain exceptions as more
fully described in the indenture governing the 2012 Studio City
Notes.
The indenture governing the 2012 Studio City Notes contained
certain covenants that, subject to certain exceptions and
conditions, limit the ability of Studio City 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. The indenture
governing the 2012 Studio City Notes also contained conditions and
events of default customary for such financings.
There were provisions under the indenture governing the 2012 Studio
City Notes that limited or prohibited certain payments of dividends
and other distributions by Studio City Finance and its restricted
subsidiaries to companies or persons who were not Studio City
Finance or restricted subsidiaries of Studio City Finance, subject
to certain exceptions and conditions. As of December 31, 2018,
the net assets of Studio City Finance and its restricted
subsidiaries of approximately $1,117,000 were restricted from being
distributed under the terms of the 2012 Studio City Notes.
2016 Studio City Secured Notes
On November 30, 2016, Studio City Company issued $350,000 in
aggregate principal amount of 5.875% senior secured notes due 2019
and priced at 100% (the “2016 5.875% SC Secured Notes”)
and $850,000 in aggregate principal amount of 7.250% senior secured
notes due 2021 and priced at 100% (the “2016 7.250% SC
Secured Notes” and together with the 2016 5.875% SC Secured
Notes, the “2016 Studio City Secured Notes”). The Group
used the net proceeds from the offering, together with cash on
hand, to fund the repayment of the Studio City Borrower’s
prior senior secured credit facilities. The 2016 5.875% SC Secured
Notes and 2016 7.250% SC Secured Notes mature on November 30,
2019 and November 30, 2021, respectively, and the
interest on the 2016 5.875% SC Secured Notes and 2016 7.250% SC
Secured Notes is accrued at a rate of 5.875% and 7.250% per annum,
respectively, and is payable semi-annually in arrears on
May 30 and November 30 of each year, commenced on
May 30, 2017.
The 2016 Studio City Secured Notes are senior secured obligations
of Studio City Company, rank equally in right of payment with all
existing and future senior indebtedness of Studio City Company
(although any liabilities in respect of obligations under the 2016
Studio City Credit Facilities that are secured by common collateral
securing the 2016 Studio City Secured Notes will have priority over
the 2016 Studio City Secured Notes with respect to any proceeds
received upon any enforcement action of such common collateral) and
rank senior in right of payment to any existing and future
subordinated indebtedness of Studio City Company and effectively
subordinated to Studio City Company’s existing and future
secured indebtedness that is secured by assets that do not secure
the 2016 Studio City Secured Notes, to the extent of the assets
securing such indebtedness.
All of the existing subsidiaries of Studio City Investments (other
than Studio City Company) and any other future restricted
subsidiaries that provide guarantees of certain specified
indebtedness (including the 2016 Studio City Credit Facilities)
(the “2016 Studio City Secured Notes Guarantors”)
jointly, severally and unconditionally guarantee the 2016 Studio
City Secured Notes on a senior basis (the “2016 Studio City
Secured Notes Guarantees”). The 2016 Studio City Secured
Notes Guarantees are senior obligations of the 2016 Studio City
Secured Notes Guarantors, rank equally in right of payment with all
existing and future senior indebtedness of the 2016 Studio City
Secured Notes Guarantors and rank senior in right of payment to any
existing and future subordinated indebtedness of the 2016 Studio
City Secured Notes Guarantors. The 2016 Studio City Secured Notes
Guarantees are pari passu to the 2016 Studio City Secured Notes
Guarantors’ obligations under the 2016 Studio City Credit
Facilities, and effectively subordinated to any future secured
indebtedness that is secured by assets that do not secure the 2016
Studio City Secured Notes and the 2016 Studio City Secured Notes
Guarantees, to the extent of the value of the assets.
The 2016 Studio City Secured Notes are secured, on an equal basis
with the 2016 Studio City Credit Facilities, by substantially all
of the material assets of Studio City Investments and its
subsidiaries (although obligations under the 2016 Studio City
Credit Facilities that are secured by common collateral securing
the 2016 Studio City Secured Notes will have priority over the 2016
Studio City Secured Notes with respect to any proceeds received
upon any enforcement action of such common collateral). The common
collateral (shared with the 2016 Studio City Credit Facilities)
includes a first-priority mortgage over any rights under the land
concession contract of Studio City and an assignment of certain
leases or rights to use agreements; as well as other customary
security. Each series of the 2016 Studio City Secured Notes is
secured by the common collateral and, in addition, certain bank
accounts (together with the common collateral, the
“Collateral”). All bank accounts of Melco Resorts Macau
related solely to the operations of the Studio City Casino are
pledged under 2016 Studio City Credit Facilities and related
finance documents. In addition, the 2016 Studio City Secured Notes
are also separately secured by certain specified bank accounts.
At any time prior to November 30, 2018, Studio City Company
had the options i) to redeem all or a portion of the 2016 7.250% SC
Secured Notes at a “make-whole” redemption price; and
ii) to redeem up to 35% of the 2016 7.250% SC Secured Notes with
the net cash proceeds of certain equity offerings at a fixed
redemption price. Thereafter, Studio City Company has the option to
redeem all or a portion of the 2016 7.250% SC Secured Notes at any
time at fixed redemption prices that decline ratably over time. At
any time prior to November 30, 2019, Studio City Company has
the options i) to redeem all or a portion of the 2016 5.875% SC
Secured Notes at a “make-whole” redemption price; and
ii) to redeem up to 35% of the 2016 5.875% SC Secured Notes with
the net cash proceeds of certain equity offerings at a fixed
redemption price. Further, under certain circumstances and subject
to certain exceptions as more fully described in the indenture
governing the 2016 Studio City Secured Notes, Studio City Company
also has the option to redeem in whole, but not in part the 2016
Studio City Secured Notes at fixed redemption prices.
In the event that the 2012 Studio City Notes were not refinanced or
repaid in full by June 1, 2020 in accordance with the terms of
the 2016 7.250% SC Secured Notes (and in the case of a refinancing,
with refinancing indebtedness with a weighted average life to
maturity no earlier than 90 days after the stated maturity date of
the 2016 7.250% SC Secured Notes), each holder of the 2016 7.250%
SC Secured Notes would have the right to require Studio City
Company to repurchase all or any part of such holder’s 2016
7.250% SC Secured Notes at a fixed redemption price.
The indenture governing the 2016 Studio City Secured Notes contains
certain covenants that, subject to certain exceptions and
conditions, limit the ability of Studio City Company, Studio City
Investments and their respective restricted subsidiaries to, among
other things: (i) incur or guarantee additional indebtedness
and issue certain preferred stock; (ii) make specified
restricted payments (including dividends and distribution with
respect to shares of Studio City Company) and investments;
(iii) prepay or redeem subordinated debt or equity and make
payments of principal of the 2012 Studio City Notes;
(iv) issue or sell capital stock; (v) transfer, lease or
sell assets; (vi) create or incur certain liens;
(vii) impair the security interests in the Collateral;
(viii) enter into agreements that restrict the restricted
subsidiaries’ ability to pay dividends, transfer assets or
make intercompany loans; (ix) change the nature of the
business of the relevant group; (x) enter into transactions
with shareholders or affiliates; and (xi) effect a
consolidation or merger. The indenture governing the 2016 Studio
City Secured Notes also contains conditions and events of default
customary for such financings.
There are provisions under the indenture governing the 2016 Studio
City Secured Notes that limit or prohibit certain payments of
dividends and other distributions by Studio City Company, Studio
City Investments and their respective restricted subsidiaries to
companies or persons who are not Studio City Company, Studio City
Investments and their respective restricted subsidiaries, subject
to certain exceptions and conditions. As of December 31, 2018,
the net assets of Studio City Investments and its restricted
subsidiaries of approximately $1,044,000 were restricted from being
distributed under the terms of the 2016 Studio City Secured
Notes.
Philippine Notes
On January 24, 2014, Melco Resorts Leisure issued
PHP15 billion in aggregate principal amount of 5% senior notes
due 2019 (equivalent to $336,825 based on the exchange rate on
the transaction date) and priced at 100% and offered to certain
primary institutional lenders as noteholders via private placement
|
