New Cotai Holdings LLC and three affiliated companies that hold a 23 percent interest in a Macau gaming resort have filed for bankruptcy protection, declaring an $856 million debt.
The New Cotai companies are based at the offices of Silver Point Capital, a Greenwich hedge fund. They filed Chapter 11 bankruptcy petitions in White Plains where they have an account with Bank of America.
The companies were formed to invest in Studio City International Holdings Ltd., a hotel, gaming and retail complex in Macau. The first phase opened in 2015.
New Cotai issued $467.5 million in notes in 2013 and 2014 “directly tied to the development and success of the Studio City project,” John Brecker, a restructuring consultant, stated in a court filing.
As of May 1, the companies were on the hook for $856 million in principal and interest.
Brecker attributed New Cotai’s financial difficulties to construction delays, an extra $300 million is construction costs, fewer gaming tables allocated by the Macau government and unanticipated declines in the gambling market.
“Through no fault of their own,” he stated, “the debtors (New Cotai) were unable to satisfy the notes obligations by their maturity.”
Studio City was supposed to complete its second phase by last July, under the terms of a land grant, or risk forfeiture of the entire project to the Macau government. They’ve been granted an extension to July 2021.
The New Cotai companies believe its investment is still viable, Brecker stated, and if the second phase opens on time the project will generate “sufficient value to repay the notes in full.”
Meanwhile, the companies have secured $6.25 million in outside financing and have begun discussions with creditors to restructure in bankruptcy.
The New Cotai companies are managed by Silver Point Capital employees Michael Gatto, Anna Kanterakis and David Reganato. Silver Point has a separate 13 percent interest in Studio City, according to Brecker, through affiliates that are not part of the New Cotai companies.
New Cotai is represented by attorney Jay M. Goffman of Skadden, Arps, Slate, Meagher & Flom.