Wynn Resorts Gets Financial Flexibility From Deutsche Bank
Wynn Resorts is receiving a bit of flexibility on its credit agreement with Deutsche Bank. All of this is because of the coronavirus pandemic. The company is receiving a covenant relief period to avoid default, as most local operators contend the lockdown caused by COVID-19
Insiders believe the company will approach its German lender in regards to relaxing debt covenants. Wynn is joining the likes of Sands China, MGM China, and other operators in seeking a loosen interest coverage and leverage ratio requirements that might be breached if casinos are closed than for much longer time.
“The Credit Agreement Amendment amends the Credit Agreement to, among other things: (i) implement a financial covenant relief period through April 1, 2021 (unless earlier terminated by WRF) and (ii) implement a financial covenant increase period commencing on the first day after the expiration of the Financial Covenant Relief Period and ending on the first day of the fourth fiscal quarter after the expiration of the Financial Covenant Relief Period (unless earlier terminated by WRF),” according to a filing with the Securities and Exchange Commission (SEC).
In line with the amendments, Deutsche Bank agrees to alter the definition of consolidated earnings before taxes, depreciation, and so on. The bank also decided to change the accord’s definition of “material adverse effect” to accommodate the impact of COVID -19 on businesses.
Extra Details
The amendment includes some specific restrictions on payments, which may include limitations on the size of dividends the Wynn Resorts Finance receives from its operations.
As it is with operators who seek more financial room from their creditors, Wynn acquired an increase of its net leverage ratio from the Deutsche Bank. This enabled the operator to house more debt in the current economic climate.
