CHILE – Enjoy features Investor Update with Disclaimer
Non-financial document lists municipal casinos’ development in 2020-2023 period
Last week troubled Chilean casino operator Enjoy S.A. featured an Investor Update showing investment plans for the company that has gone into a type of Chapter 11 before the 8th Santiago Judicial Civil Court, in the process of Financial Restructuring. The Financial Update, however, carries a Disclaimer indicating that, “this document is solely for information and illustration and it is not, nor does it pretend to be, a source of financial consultancy on the matter contained herein”.
The opening page of the Update shows, “Financial Plan – Considerations” with seven items listed. Item 5 relates to “New Market Developments,” featuring a new online product, “Enjoy Interactive,” as a novel item, and “Chile Market Share Recovery,” posing questions about both items.
The main question relates not only to uncertainty in the global gaming market as well as Chile in the post COVI-19 future, but also more pointedly to the situation of the four municipal casinos that Enjoy won in 2019 public tenders.
As the municipal casino operator in all four properties in Coquimbo, Viña, Pucón y Puerto Varas, Enjoy already accounts for revenue from those casinos. However, during the last week in April 2020, the company asked the Chile regulators (Superintendencia de Casinos de Juego – SCJ) for alternatives to comply with the conditions of all four tenders, citing, “fortuitous reasons or force majeure that make it impossible (for us) to undertake developing the projects as part of our commitments in the tenders”.
As shown in Figure 1., the section on Consolidated Capex in Enjoy’s Financial Plan provides for the development of municipal casinos in the period 2020-2023, and this should clear up doubts about the company’s request to SCJ related to the municipal casinos tenders. Following such a request, Vivién Villagrán – SCJ Chief, had made it plain on May 12, in an interview at Santiago’s Radio Duna, that Enjoy had to comply with the municipal casinos’ tenders: “We hold Enjoy bank guarantees for about US$170 million, which basically guarantees 5% of the investment projects, which the company presented at the time of the award of the (municipal casinos) licences.”
Notwithstanding the above, reports in the local press on Enjoy’s financial reorganization plans to ensure Enjoy’s future financial viability do not mention the situation of the municipal casinos, merely focusing on loans and the support of the company’s major shareholders and creditors to guarantee new conditions for debt repayment and re-financing with which to cover Enjoy’s financial obligations accumulated over periods of 2020 and part 2021.
The Enjoy Investor Update also does not mention the company’s legal situation, which to date has a lawsuit before the Court of Defense of Free Competition (TDLC), initiated by rival competitors Sun Dreams, citing “unfair practices carried out by Enjoy”, that seeks to reverse the licensing through tenders of municipal casinos in Pucon and Puerto Varas. Added to this is an investigation by the Comptroller General of Valparaíso, for alleged “irregularities in the licensing concession that company operator of Casino Viña del Mar, Antonio Martínez and Compañía Limitada granted to Enjoy for (same) municipal casino of Viña del Mar”.
The Investor Update does not contain figures related to the new Enjoy Interactive product, apart from regional indications for iGaming, because there is no legislation for online or sports betting gambling in Chile. In addition, Enjoy must deal with the new licensing process for Enjoy Antofagasta casinos and Casino Gran Los Angeles, which they own and operate, as part of the licensing renewal process.
The next two weeks are crucial to Enjoy’s future plans, as they are to hold an Extraordinary Shareholders’ Meeting on August 24, 2020. Speaking to the press, Rodrigo Larraín, general manager of the company, said: “We have absolute confidence that this plan leaves the company with a solid financial structure for its future development, allowing us to maximize the opportunities of recovery and to generate value for the company.”
