Bloomberry Secures P72 Billion Refinancing to Bolster Solaire Expansion

Bloomberry Resorts Secures P72 Billion Refinancing to Boost Solaire North Expansion

Bloomberry Resorts Corporation (stock: BLOOM), led by billionaire Enrique K. Razon Jr., has secured a P72 billion syndicated refinancing facility from a consortium of four major banks. The refinancing deal, which involves BDO Unibank (stock: BDO), Bank of the Philippine Islands (stock: BPI), China Banking Corporation (stock: CBC), and Philippine National Bank (stock: PNB), is expected to strengthen the company's financial position while supporting the expansion of its latest project, Solaire Resort North.

The new loan replaces previous loan facilities totaling P93.5 billion, which included a P73.5 billion loan from 2018 and an additional P20 billion obtained in 2020. The refinancing offers more favorable terms, including a 75-basis point reduction in interest rates compared to previous loans. Additionally, Bloomberry has the option to fix interest rates within the next 12 months, allowing it to benefit from possible future interest rate cuts.

Back-ended Repayment Structure

A notable feature of the new loan is its back-ended principal repayment schedule. This structure means that over 65% of the total loan amount will be due in the final five years of the 10-year loan term, maturing in 2034. Such a repayment plan eases Bloomberry’s immediate financial burden, freeing up cash flow in the near term, which is crucial as Solaire Resort North ramps up its operations.

The timing is significant, given that Bloomberry has faced increased costs from the recent opening of Solaire North in Quezon City. The $1 billion integrated resort, which opened its doors in May 2023, has incurred pre-operating expenses of P764.1 million. Despite this, Solaire North has already contributed P250 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) within just over a month of operation.

Impact on Bloomberry's Financial Performance

The refinancing is seen as a strategic move to ensure long-term financial stability. "This refinancing will allow the company to lighten its debt service and preserve cash as Solaire Resort North ramps up. It will also improve the bottom line and ensure consistent returns to our shareholders," said Enrique Razon, Chairman and CEO of Bloomberry.

The improved loan terms will not only ease the company's debt burden but also create room for capital allocation to other growth initiatives. This is crucial, as Bloomberry reported a 37.5% drop in consolidated net income in the first half of 2023, primarily due to the high costs associated with the Solaire North project and a dip in revenues from its VIP gaming segment.

Positioning for Future Growth

Bloomberry’s portfolio also includes the flagship Solaire Resort & Casino in Entertainment City, Manila, and the Jeju Sun Hotel & Casino in South Korea. The company is positioning itself to capture growth opportunities across its portfolio, particularly with the ramp-up of Solaire Resort North, which has been touted as a key driver of future earnings.

The refinancing deal aligns with Bloomberry's broader financial strategy to manage its debt effectively while maintaining liquidity for future expansions. With a longer repayment schedule and lower interest costs, the company is better positioned to navigate the operational challenges of its expanding portfolio and the current economic landscape.

For investors, the deal signals a more secure financial footing for Bloomberry as it moves forward with its ambitious projects. Although the company’s stock price has faced some pressure—recently closing at P7.89 per share, down 0.88%—the long-term outlook appears positive as Solaire North’s performance improves and costs stabilize.

Key Takeaways

Refinancing Success: Bloomberry Resorts has secured a P72 billion syndicated refinancing facility, significantly improving its financial stability.
Lower Interest Rates: The new loan features a 75-basis point reduction in interest rates compared to previous facilities, allowing for decreased borrowing costs.
Back-ended Repayment: The loan structure includes a back-ended repayment schedule, with over 65% of the principal due in the final five years, easing immediate cash flow pressure.
Support for Solaire Resort North: The refinancing will bolster operations at Solaire Resort North, which is crucial for Bloomberry’s future growth and profitability.
Improved Financial Position: The deal positions Bloomberry to better manage its debt while maintaining liquidity for expansion and operational needs.

Bloomberry Resorts' P72 billion refinancing facility represents a strategic move to enhance financial flexibility while supporting the growth of Solaire Resort North. With favorable loan terms and a back-ended repayment structure, the company can better manage its debt while focusing on expanding its integrated resort portfolio. Investors and stakeholders can expect improved financial performance and shareholder returns as Bloomberry capitalizes on its new ventures.