Wynn Resorts has vowed to continue investing in Macau despite the hurdles the region is facing. To prove this, the gambling giant loaned $500 million to its Wynn Macau arm, helping it recover from COVID-19.
Wynn Resorts Lent $500M to Wynn Macau
Wynn Macau will use the money to bolster its business and mitigate the damage caused by COVID-19 and China’s zero-COVID policy. According to the announcement, Wynn Macau will use the funds for its future working capital and other funding needs. As per the agreement, the revolving credit will have a 4% annual interest rate. Wynn Macau will have to pay the money back in two years.
Through this move, Wynn Resorts demonstrates trust in its Macau-based arm. Right now, the gambling market in the special administrative region is facing some serious trouble. The pandemic caused a sharp decline in the region’s overall gross gambling revenues.
Overall, all six concessionaires in Macau have been forced to resort to loans to navigate across the troubled landscape. Finance specialists believe that the total debt of the Macau casino operators will rise to $25 billion. Remarkably, this is $2 billion more than earlier projections. Even worse, some argue that the total debts could soar to $27 billion if China’s zero-COVID policy doesn’t receive any changes in the next few months.
Many Believe the Macau Market Will Recover
Despite the problems, Wynn Resorts is optimistic about its financial position in the region and is more than willing to support it with a loan. The company is not concerned about the survivability of its Macau arm and is bullish on pushing through the difficult times.
Analysts from Morgan Stanley, a leading financial services company, recently ran the calculations. According to the finance experts, Wynn Macau has enough capital to survive at least three more years even if the situation doesn’t get better.
Some investors are also certain that the Macau market will experience a strong recovery once the pandemic is under control. David Tepper, the owner of the Carolina Panthers from the National Football League, recently invested in Wynn Resorts and Las Vegas Sands. Tepper’s gambit shows that he has no doubts about the eventual recovery of the gambling industry in Macau.
Furthermore, Wynn executives vowed to forfeit their salaries (or parts of them) in exchange for shares in the company. This move aimed to boost trust in the company’s damaged stock and to show that the higher-ups will do everything in their power to turn the tide.