Australian operator Crown Resorts is in a position to weather the storm created by the coronavirus crisis, due to its low debt and variable cost structure, according to Fitch Ratings.
These factors give the operator the “headroom to absorb the effect of the government shutdown of casinos,” it said in a note.
The company has closed its entertainment venues, although some restaurants are providing takeaway meals. It has also retained some hotel capacity, including rooms provided to the government to isolate arrivals to the country.
“Importantly, Crown has no significant bond maturities before the financial year ending June 2025 (FYE25) – although around AUD230 million in committed credit facilities mature within the next six months which Fitch expects Crown to be able to renew – manageable covenant risk, and available liquidity to meet operating expenses over the duration of the shutdowns,” the note said.
The ratings agency also notes that unlike many operators, the company has a variable cost structure and therefore should be able to reduce its cash outflows. In particular, it benefits from the ownership of its properties. The company is also expected to stand down staff and will benefit from an Australian government policy to pay fortnightly payments to workers who have been furloughed, meaning employees will use less of their annual leave that Crown would have needed to fund.
Fitch says it expects Crown’s key leverage metrics to remain well below the level at which it would take negative ratings action.
“We then expect Crown to deleverage quickly from FYE22 as normal operations resume for the full-year and Crown Sydney commences operations in early 2021.”