The former Portuguese enclave, Macau boasts one of the most profitable casino gambling industries in the world with billions made yearly. However, due to the ongoing coronavirus pandemic, the Macau gambling industry has come across serious obstacles and challenges. As reported by several local news outlets, the negative impacts of the ongoing coronavirus pandemic will very soon prompt the six fully licensed and regulated casino operators to reveal their combined deficits in earnings for the second quarter.

According to the company’s officials, their combined deficits in earnings before amortization, depreciation, interest, and taxes went over $1 billion which is a massive loss. As revealed by Inside Asian Gaming, the forecast was made by the Morgan Stanley brokerage and investment company concerning the financial results from the major Macau casino operators. These include Melco Resorts and Entertainment Limited, SJM Holdings Limited, MGM China Holdings Limited, Sands China Limited, Galaxy Entertainment Group Limited, Wynn Resorts Limited, and Wynn Macau Limited.

Re-Opened Macau Casinos Struggling to Attract Customers

Back on the 4^th of February, the government of Macau decided to shutter every one of those thirty-nine commercial casinos in Macau due to the rising numbers of coronavirus infections in the country. The Macau casinos just recently re-opened, but they have been struggling to attract customers mainly due to social distancing, travel restrictions, and other safety and protection measures that are still in place.

After over two months of being closed, the Macau casinos can only expect negative financial results for the previous period alongside other negative consequences of the ongoing coronavirus pandemic which will last for months to come.  The Morgan Stanley brokerage and investment company’s main analysts Praveen Choudhary and Gareth Leung recently revealed that those six major casino operators in Macau are expected to record combined second-quarter deficits in earnings before amortization, depreciation, taxes and interested of around $1.04 billion.

According to the same analysts, the casino operator with the biggest financial losses and deficits in earnings is the Sands China Limited company with a massive shortfall of $286 million. According to Praveen Choudhary and Gareth Leung from Morgan Stanley, another company with a similar deficit of around $205 is Melco Resorts and Entertainment. According to the pair, the Melco Resorts and Entertainment Limited is about to record the worst financial result for the three last three-month period when it comes to the local casino gambling industry.

Reducing Operational Expenses

Nonetheless, both Praveen Choudhary and Gareth Leung proclaimed that these rather devastating financial results from the six Macau casino operators could also provide an important glimpse into the operators’ current operational expenses alongside other important information such as which operators had managed to reduce some of their operational costs and which portions of the expected cut remains sustainable in the longer run.

The pair also clarified that the latest financial information on the aggregated deficits in earnings for the six Macau casino operators also revealed which casino operators had been able to better manage their rising operational expenses alongside the aggregated daily rate which as estimated recent dropped by around 21% on a yearly basis to hit only around $15 million. The pair’s official statement also reads that Macau casino gambling stocks increased by around 21% in the latest quarter so they believe that the worst is behind the Macau casino operators.

As reported recently by several local news outlets, one of the most renowned Macau-based casino operators, the MGM China Holdings Limited company has announced some of its future plans following the recent mandatory shutdown of its casino venues due to the ongoing coronavirus pandemic. As reported, MGM China Holdings Limited has been granted a brand-new credit facility which the company will use to help its business operations survive the negative financial impact of the coronavirus pandemic-related shutdown.

According to reports released by GGRAsia and Inside Asian Gaming, MGM China Holdings Limited used one of his latest official press releases to share more details about its new credit facility. As revealed, the credit provision which the company has agreed with its lenders is worth over $301 million. Nonetheless, this value may go over $503 million under specific conditions if necessary, to help the company stay afloat and to help its business survive.

Details About MGM China Holdings Limited

The MGM China Holdings Limited firm is one of the most prominent hospitality companies in Asia. In fact, the company is one of the leading operators, owners, and developers of lodging and gaming resorts in China. Moreover, MGM China Holdings Limited is also the holding firm of MGM Grand Paradise which is one of the six operators that has been granted the necessary rights to own and operate casino gambling venues in the Asian capital city of gambling, Macau.

When it comes to the MGM Grand Paradise firm, it owns and manages one of the most iconic casino facilities in Macau, MGM Macau. The venue is the award-winning fully integrated casino gaming resort situated on the Macau Peninsula. The company also owns and operates MGM Cotai that is a fully integrated, luxury resort located in Cotai which opened its doors back in 2018.

The company’s MGM Macau offers around six hundred hotel rooms alongside many other luxury amenities including five-star hotel suits, the MGM Art Space as well as, conference and meeting areas, fine dining restaurants, and one of the biggest casino floors in Macau. MGM Cotai is no less impressive packed with one thousand and four hundred luxury hotel suites and rooms, a high-end spa, meeting space, food and beverage outlets, and much more for the ultimate gaming and entertainment experience.

Disappointing First-Quarter Revenues

Due to the ongoing coronavirus pandemic and related negative and even devastating financial impacts, the MGM China Holdings Limited company saw aggregated gross net revenues for its MGM Cotai and MGM Macau venues drop by around 63% on a yearly basis to reach around $270.91 million in the first four months of 2020. At the same time, the company’s associated earnings before amortization, depreciation, taxes, and interest hit a massive deficit of around $12.9 million.

One of the major reasons behind such disappointing first-quarter net revenues related to travel restrictions which were put in place by the government of Macau following mandatory casino lockdowns issued back in March. Travel restrictions alongside mandatory lockdowns have caused MGM Cotai and MGM Macau’s occupancy rate to drop to around 36%. Consequently, the company in charge burned around $1.5 million every single day.

Majority owned by the MGM Resorts International company which is an American casino operator, the MGM China Holdings Limited company also shared that it will probably access its new credit facility provision as soon as it provides the necessary evidence that all of its $1.25 billion senior credit facility has been exhausted. According to the company’s officials, its latest cash provision is also subject to fluctuating annual interest rates as grounded on the HIBOR or the Hong Kong Interbank Offered Rate alongside a 2.75% margin according to the company’s leverage ratio.