OUR "NOTES" FROM THE GALAXY FINANCING UPDATE

Galaxy Entertainment hosted a conference call to provide a financing update.  Here are our notes.

 

HIGHLIGHTS FROM THE RELEASE:

  • Galaxy announced that it procured a HK$8.8BN secured club loan with a consortium of Asian banks that will provide enough financing to complete the HK$14.1BN Galaxy Macau development scheduled to open in early 2011.
    • Loan was oversubscribed
    • Banks will not syndicate the loan
    • "Terms represent lowest cost of capital available in the current market" - H + 4.5% (4.7% today) with a Term of 6 years (compares to their 9.7% current rate on their debt)
  • Detailed Annual & 4Q09 update on 4/20/2010

Q&A:

  • The facade of building is almost complete. They have over 2,000 workers there currently.  Don't need 3-4,000 people for the project.
  • Have a full master plan for the site that they have submitted to the government - there will be at least 4 phases.  Decided not to build it all at once
  • Closing on the transaction? Final stages of the documentation stage now, closing end of April /early May closing
    • Covenants? Taken lessons from others to avoid mistakes
  • Why no syndication?
    • Vote of confidence in their strategy.  The entire amount is being held with no sell down for the entire term
  • Any shift to profit share from 1.25% RC programs? Not really
  • Cotai project isn't impacted by the table cap