Hong Kong-listed Cambodian casino operator NagaCorp has issued an update on its financial position, reiterating its confidence in being able to fully repay US$472 million in outstanding Notes when they fall due in July 2024.
Days after revealing that the company’s controlling shareholder, Dr Chen Lip Keong, would provide a US$80 million shareholder’s loan for the express purpose of helping repay the notes, NagaCorp said in an overnight filing it is “of the view” that the loan along with cash on hand would be sufficient for full repayment “given the current rate and speed of cash generation of the Group.”
According to NagaCorp, it currently has US$324 million in unaudited cash and bank balances on hand, leaving the group with US$404 million of the US$472 million needed in nine months’ time.
The update may be in response to commentary from Moody’s Investors Service earlier this week which suggested NagaCorp would need to generate free cash flow of US$135 million over the next three quarters to cover the bond maturity, assuming the company would also require at least US$40 million set aside in working capital.
Moody’s also observed that NagaCorp’s earnings recovery has to date been slower than anticipated although should continue to improve over the next 12 months from seasonal peaks in Cambodia’s tourist arrivals in the first and fourth quarters of each year.
“We assume that the company can generate EBITDA of around US$350 million in 2023 and US$485 million in 2024, but a slower-than-expected recovery would be likely to put pressure on NagaCorp’s liquidity,” it said.
“For the first nine months of 2023, the company reported EBITDA of US$215 million, which is tracking behind our full-year projection as earnings recovery in the third quarter was hindered by election activities in Cambodia.”
NagaCorp runs Cambodia’s only integrated resort, NagaWorld in Phnom Penh, which operates with a government-imposed monopoly on casino gaming within a 200km radius. The company recently postponed by four years the planned opening date of its US$3.5 billion Naga3 expansion project.
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