Lawrence Ho to Receive $10m worth of Melco Shares

Melco Resorts Entertainment logo

Casino chairman and chief executive Lawrence Ho has been granted shares to the value of US$10 million by Melco Resorts and Entertainment, under the company’s Share Incentive Plan.

Inside Asian Gaming reports that the grant of 484,956 American Depositary Shares, equivalent to almost 1.5 million Melco Resorts shares, will be vested to Ho in two separate tranches, Melco said.

The shares will be granted on April 7, 2023 and April 7, 2024.

The shares represent approximately 0.10 per cent of Melco Resorts’ issued share capital and have a value of US$10 million based on the current share price.

In a Nasdaq filing, Melco said the grant was determined “with reference to Ho’s duties and responsibilities as a director of a subsidiary of Melco Resorts in Macau, where the majority of Melco Resorts Group’s business is located.

“The purpose of the aforesaid grant is for incentivising and motivating him to strive for the future development of the Melco Resorts Group and its business.”

Melco Resorts recently reported a loss before tax of almost US$1.5 billion in 2020, due to the impact of the COVID-19 pandemic on its operations in Macau and the Philippines.

Melco’s pain to get worse before it gets better

COVID-19 casino stats

The global casino market’s recovery remains lethargic and that could spell problems for one of the world’s biggest casino operators.

Casino.org reported in January that Melco Resorts and Entertainment could see its debt burden balloon over the next 12 to 18 months.

The company is one of the six concessionaires in the special administrative region of Macau and Moody’s Investors Service, which commented on the City of Dreams operator’s finances after its Melco Resorts Finance issued senior unsecured notes last week.

The research firm rates those bonds, which mature in 2029 with a “negative” outlook.

“Melco’s operations continue to be weak amid lingering pandemic-related disruption,” Moody’s said.

“The company reported negative earnings before interest, taxes, depreciation and amortisation of $221 million for the first nine months of 2020, compared with $1.2 billion positive EBITDA a year earlier.”

In addition to the City of Dreams, Melco’s Macau operations include Altira Macau, Studio City and Mocha Clubs.

Analysts expect the Macau recovery will gain steam in the second half of 2021, with current improvements merely incremental.

Moody’s said the rebound pace will be sluggish for most of 2021 because of travel restrictions and social distancing protocols at the Macau gaming properties.

Currently, Macau is only allowing visitors from mainland China, Hong Kong and Taiwan to enter.

As such, the research firm believes it will be 2022-23 before gross gaming revenue there returns to pre-pandemic levels.

That lethargy could be a drag on Melco, particularly with rising debt levels.

“At the same time, Moody’s expects Melco Resorts and Entertainment’s consolidated debt level, including lease liabilities, to increase to around $7 billion over the next 12-18 months from $6.1 billion as of September 30, 2020.

Expenditures for Studio City and its gaming venue in Cyprus could also limit Melco’s free cash flow, the note said.

Melco gets financial relief from lenders

It’s been a trying year for many casino operators, but for Melco Resorts it’s been particularly difficult.

Calvin Ayre reported in November that the operator lost $331 million in the third quarter and the fourth quarter is not shaping up to be much better.

Melco said its activity in Manila and Cyprus was helping to shore up its finances, but Cyprus has since taken a step backward and two Melco casinos were temporarily closed two weeks ago.

With more financial restraints on the way, the company has reached out to its lenders for relief and been granted it.

The wholly-owned Melco subsidiary that is responsible for the company’s City of Dreams Macau and Altira Macau, Melco Resorts Finance Limited, reported last Friday that it had worked out a deal with lenders to renegotiate some terms associated with credit lines it received earlier this year.

At the end of April, the company received a revolving credit facility worth $1.92 billion from a group of financial institutions, which Melco wanted to use to increase its liquidity throughout the ongoing coronavirus pandemic.

William Brown

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