Melco International Development, the Hong Kong-listed parent of Macau concessionaire Melco Resorts & Entertainment, has proposed raising HK$780 million (US$97.5 million) via a rights issue of 758,341,877 Rights Shares to existing shareholders.
The proceeds are to be used to pay down a portion of the outstanding 2021 Credit Facility, due in June and July of this year, plus interest, the company explained in a filing.
The rights shares are to be offered on the basis of one rights share for every two existing shares at a subscription price of HK$1.0286 per share. They represent around 50% of the existing issued shares in the company or 33.3% of issued shares as enlarged by the rights issue, Melco explained.
In explaining the reasons for the right issue, Melco said that, “In light of the company’s current capital structure, the Board considers that it is appropriate to raise new capital in the form of equity to pay down a portion of the company’s existing debt, strengthen its balance sheet and enhance the capital structure for long term development.
“The Board has explored various fund-raising options and considers a rights issue and open offer will provide an opportunity for all Shareholders to participate in the future development of the Company on equal terms and maintain their shareholdings in the Company.
“A rights issue will also provide Qualifying Shareholders flexibility to sell their entitlements on the open market for cash realization. Having considered the above, the Board considers that the rights Issue is currently the preferred means to strengthen the group’s financial position and is in the best interests of the Shareholders as a whole.”
Melco explained that its current assets total around HK$84.75 billion (US$10.6 billion), while interest-bearing borrowings outstanding – net of deferred financing costs and
adjustments of modification of debts – amounted to approximately HK$60.69 billion (US$7.59 billion). This has resulted in a gearing ratio of 71.6%, up from 42.4% as of 30 June 2019.
“Out of the HK$60.69 billion in borrowings outstanding, net of deferred financing costs and adjustments of modification of debts as of 31 December 2024, the current portion amounted to approximately HK$9.48 billion (US$1.19 billion),” Melco said.
“This amount is attributable to the aggregate total of two outstanding senior unsecured notes due in June and July 2025 which were issued by two respective subsidiaries of the Company. As of 31 December 2024, the Group has approximately HK$15.8 billion (US$1.98 billion) of availability under committed revolving credit facilities, which is more than sufficient to cover potential refinancing of the Senior Notes.”
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