• It's Coming...

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Tickers: SGMS, WYN, MTN

EVENTS

  • Sept 1/2:  Revel closes

COMPANY NEWS 

SGMS (Leveraged Finance News) A banker’s meeting is scheduled for Sept. 3 for the launch of a $2.085 billion loan facility for Scientific Games Corp., which is using the proceeds to partially fund its announced $5.1 billion acquisition of Bally Technologies.

Takeaway: Financing shouldn't be a problem.

WYN – announced it renewed its securitized timeshare receivables conduit facility for an additional year, extending it through August 26, 2016. The facility bears interest based on variable commercial paper rates plus a spread or the LIBOR rate plus a spread and has a capacity of $650 million. The renewal involved execution of a Fifth Amendment, dated as of August 28, 2014, to the Amended and Restated Indenture and Servicing Agreement, dated as of October 1, 2010, by and among Sierra Timeshare Conduit Receivables Funding II, LLC, as Issuer, Wyndham Consumer Finance, Inc., as Servicer, Wells Fargo Bank, National Association, as Trustee and U.S. Bank National Association, as Collateral Agent.

Takeaway: The renewal was widely anticipated given the continued appetite for fixed income risk assets.

MTN – District Court Judge Ryan Harris delayed his decision on how much Park City Mountain Resort will have to pay if it wants to have a ski season this winter until September 3.  During the hearing, PCMR said it was willing to post between $1 and 6 million in a bond. Talisker, on the other hand, suggested they should post as much as $124 million.

Takeaway: The battle for champagne powder continues.

INDUSTRY NEWS

Macau Package Tours and Hotel Occupancy Rate for July 2014

Visitor arrivals in package tour increased by 35% YoY to 1,158,000 in July 2014, attributable to a 39% surge in visitors from Mainland China (946,000), with 367,000 coming from Guangdong Province. Visitors from Taiwan (75,000) and Japan (12,000) increased by 28% and 23% respectively, and those from the Republic of Korea (27,000) also registered a slight growth.

Takeaway:  Good visitation numbers

Changi – Singapore's Changi Airport passenger traffic grew 1% YoY in July to 4.582 million.

LEISURE LETTER (08/29/2014) - CHH

Takeaway:  Flattish visitation continues at Changi 

Native American Ruling (Indian Country Today) Tribal advocates anxiously await a meeting of an en banc panel of federal judges who will soon decide whether a legal opinion that could have a negative impact on millions of acres of tribal lands should be overturned. The judges of the 11-member panel will scrutinize a January 21 opinion of a three-judge panel of the Ninth Circuit Court of Appeals in Big Lagoon Rancheria v. California. In that 2 -1 opinion, the judges ruled that the state of California was not required under the Indian Gaming Regulatory Act (IGRA) to negotiate in good faith with Big Lagoon on a new gaming compact. The en banc panel will hear oral arguments by the tribe and state on September 17, according to an order announced on August 22 by the U.S. Court of Appeals for the Ninth Circuit.

Why was this ruling important?

In coming to the original decision, the court ruled that the tribe was not under federal jurisdiction in 1934, so 11 of the acres it proposed for gaming could not be considered Indian lands under IGRA as a result of the 2009 Carcieri v Salazar U.S. Supreme Court decision. The acres were placed into trust by the Department of the Interior in 1994. Carcieri limited Interior’s ability to take lands into trust for tribes recognized by the federal government after the Indian Reorganization Act (IRA) of 1934. The decision has been widely controversial in Indian country, and U.S. Congress members and the Obama administration have been vowing since 2009 to remedy it through legislation, but that has not happened to date. A major concern for tribal advocates is that the Big Lagoon precedent could be applied to all tribes formally recognized after 1934 if it holds, thus limiting Indian lands, sovereignty and gaming. According to a list referred to in the original decision, 258 of the 566 tribes that are currently federally recognized were recognized after 1934. 

MACRO

Hedgeye remains negative on consumer spending and believes in more inflation.  Following  a great call on rising housing prices, the Hedgeye

Macro/Financials team is turning decidedly less positive. 

Takeaway:  We’ve found housing prices to be the single most significant factor in driving gaming revenues over the past 20 years in virtually all gaming markets across the US.