New Cotai to hold restructuring talks with noteholders in Chapter 11

By Caroline Salls

Pittsburgh, May 3 – Studio City International Holdings Ltd. shareholder New Cotai, LLC filed Chapter 11 bankruptcy Wednesday in the U.S. Bankruptcy Court for the Southern District of New York.

The company said in a statement filed with the court that its ability to satisfy its notes obligations is directly tied to the development and success of its Studio City project.

Because of delays in the development of the project, a reduced allocation of gaming tables from the government and some unexpected declines in the Macau gaming market, New Cotai said the investment has not yet achieved sufficient market value, making a refinancing impossible.

As a result, the company said it was unable to satisfy its notes obligations by maturity.

New Cotai said it began discussions with an informal group of noteholders before the bankruptcy filing, and it intends to continue these talks with a goal of achieving a consensual restructuring in the Chapter 11 cases.

In conjunction with the bankruptcy filing, the company obtained a commitment for $6.25 million in debtor-in-possession financing from SPCP Group, LLC.

New Cotai said the financing will satisfy its cash needs during the restructuring process.

The facility carries a 12-month term and will accrue interest at a rate of Libor plus 700 basis points.

According to court documents, New Cotai has $100 million to $500 million in assets and $500 million to $1 billion in debt.

The company’s largest unsecured creditor is indenture trustee Wells Fargo Bank, NA of Los Angeles, which has an $856 million claim related to the company’s 10 5/8% senior pay-in-kind notes due 2019.

No other unsecured creditors were listed with claims of $1 million or more.

Studio City said in a news release that it does not expect New Cotai’s bankruptcy to have any significant impact on the business or operations of Studio City or the funding or timing of the development and construction of its phase-two expansion.

Skadden, Arps, Slate, Meagher & Flom LLP is representing New Cotai in its Chapter 11 proceedings.

New Cotai is a Greenwich, Conn. developer which owns gaming properties in Macau. The Chapter 11 case number is 19-22911.

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