US companies Hilton Worldwide and Wynn Resorts were among the ones to start exploring credit lines to shore up liquidity amid worsening market conditions triggered by the coronavirus outbreak. Hilton stock has dropped 46% amid the current crisis.
Shares of Wynn Resorts (NASDAQ:WYNN) fell 44.3% in March, according to data provided by S&P Global Market Intelligence, and fell another 19.4% in the first three days of April. The company was forced to shut down U.S. operations due to the looming coronavirus health crisis, and there’s no timetable for when they’ll open again.
Wynn is among the companies to apply for government assistance, but it’s unclear when the business will return to normal. Casinos remain closed for the time being, and it is too early to predict the full effect of the nationwide lockdown on businesses and the economy as a whole. Investors remain optimistic due to Wynn Resorts’ $2.36 billion of cash on the balance sheet and full ownership of its real estate.
Hilton Worldwide Holdings (NYSE:HLT) is also struggling with all corporate and transient travel being grounded as a result of the reaction to the coronavirus pandemic. With all events cancelled for the foreseeable future, the company was forced to withdraw its 2020 guidance, increase its stock buyback plan by $2 billion, and announce relief policies for customers who have to cancel or postpone their stays.
The coronavirus pandemic has hit the hospitality industry hard — MGM Resorts (NYSE:MGM) temporarily closed its hotels in Vegas and other cities over the weekend. Adding to the cancellation of its share buyback program, Chairman and Chief Executive Jim Murren announced on Feb. 12 that he is resigning. The company’s share price has fallen in half in 2020, but MGM insiders bought more than $27 million of stock since late March.
With the coronavirus putting entire industries in lockdown, and the related increase in travel restrictions and cancellations around the world, the potential negative impact will be greater than previous estimates. Companies like Hilton pride themselves on their ‘resilient business model’ as Christopher Nassetta, president and Chief Executive of Hilton describes it.
Hotel operator Hilton said it plans to draw down on the remaining US$195m it has on a US$1.75bn revolving credit facility, according to a Wednesday filing with the US Securities and Exchange Commission (SEC). Wynn Resorts announced its plans to tap its US$850m revolving credit facility, according to a banker.
More and more companies have reached out to their lenders with requests to tap into or increase their credit lines, with more expected, in an attempt to fortify their balance sheets against an uncertain market backdrop.