Chilean casinos cut deals to survive COVID-19
August 25, 2020 |
Enjoy gets the required financing for a restructuring agreement, while Sun International cashes in for $160 mln
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The two largest casino operators in Chile – Enjoy and Sun Dreams – are taking steps to emerge from a sharp drop in business during the COVID-19 pandemic by lining up new loans and investors, respectively.
Santiago-based Enjoy said in a securities filing that its creditors vowed to provide a total of CLP57.6 billion ($73.3 million) in financing as part of a debt restructuring, including CLP9.4 billion from international bondholders and CLP48.2 billion from local investors.
The money will likely be enough for Enjoy to reach a debt restructuring agreement, given that one of the conditions was that creditors committed at least CLP45 billion in financing.
The funds will go toward a CLP50 billion bridge loan, with each creditor providing a proportional allocation to be decided by the auditor handling Enjoy's bankruptcy. The company filed for bankruptcy protection in April after its businesses in Chile, Argentina and Uruguay were closed in March as a result of economic lockdowns to stem the spread of COVID-19.
Separately, South Africa's Sun International said it has reached an agreement to sell 65% of Sun Dreams, Chile's largest gaming company, for $160 million to Nueva Inversiones Pacífico Sur, taking the Santiago-based investment fund's stake to 100%.
The deal came after Sun International had sought for months to find a buyer, with the negotiations before this deal failing to come to a deal with Chilean casino operator Marina del Sol, which is owned by Canadian private equity company Clairvest Group and Chilean real estate firm Empresas Valmar.
Sun International said the pandemic has had a "major impact" on its business in Latin America and South Africa, adding that while Sun Dreams has opportunities for growth it also faces the challenges of having to renew casino licenses and raise funding to capitalize on them. Sun Dreams has assets in Argentina, Chile, Colombia, Panama and Peru.
Pacífico Sur is controlled and run by the brothers Claudio and Humberto Fisher Llop, who have a diversity of investments in Chile, from agriculture to entertainment and real estate development.
In a statement, Pacífico Sur CEO Claudio Fischer said that while the pandemic has slammed the hotel and casino industry in South America, his company's "strong financial position" is making it possible "to take advantage of opportunities to grow in a business that we know."