LV Sands Gains Pre-IPO Financing

LAS VEGAS-Las Vegas Sands Corp. said Wednesday it has secured commitments for up to $600 million of capital through the sale of bonds. The bonds, which mature in 2014, would be mandatorily exchangeable at any time into common stock of one of its subsidiaries after an initial public offering on the Hong Kong Stock Exchange. The interest rate will start out at 9% per annum, increase to 12% in 2010 and then increase again to 15% in 2011.

The casino-resort company filed an application last week for a possible listing on the Exchange’s main board. At the time LV Sands said it had made no determinations as to timing or terms or even whether it ultimately will proceed with an IPO.

The operator of two casinos in Macau, two on the Las Vegas Strip and one in Pennsylvania has been working to improve its liquidity and de-lever its balance sheet in the aftermath of the recession and broken credit markets that had it on the brink of loan defaults.

“The completion of this financing, which we expect to occur in a matter of days, will enhance our current liquidity position and further our efforts toward reaching long-term financial stability,” Sheldon Adelson, the company’s chairman and chief executive officer, said in a statement.

The IPO, which some analysts have speculated could raise $1 billion to $2 billion and which competitor Wynn Resorts also is considering, isn’t the only inroad the company is building.

In mid-August the company announced a deal with Bank of Nova Scotia whereby it is now allowed to sell as much as a 49.9% stake in its Macau operations–as long as a healthy chunk of the net proceeds are used to pay down its subsidiaries’ $3.3-billion credit facility with the bank. The allowance, from not being allowed to sell any stake in the operations, was part of an amended credit agreement that gives Sands a six-quarter breather from some of the requirements of its debt agreements.

The amended credit agreement also opened the door for Venetian Macau Limited and its subsidiaries to issue up to $1 billion of senior secured notes ranking pari passu with the loans outstanding under the credit agreement, and for the issuance of an additional $500 million of senior unsecured notes or senior secured notes ranking junior to the current outstanding loans as long as the consolidated leverage ratio is not greater than 3.0X. In exchange, Sands’ applicable interest rate margins for all classes of loans outstanding under the credit agreement increase by 3.25% per annum, until an amount equal to $500 million has been applied to prepay the loans under the Credit Agreement, and by 2.25% per annum after such prepayment from the applicable interest rate margins that were in place immediately prior.

“We will continue working to solidify our financial position while at the same time staying true to our long-term business strategy,” Adelson said. “Our company remains uniquely positioned to develop large scale integrated resorts and to monetize the various non-core assets of those developments, such as retail malls and residential units, when economic and capital market conditions are appropriate. This fundamental business strategy guides the planning and development of our current pipeline of projects and helps us evaluate future development opportunities as well. It also enables our company to de-lever more quickly than companies that rely largely on operations to do so, which is a key component in our ability to generate significant long-term value for our shareholders.”

In the US, Las Vegas Sands owns and operates the adjoining Venetian Resort-Hotel-Casino, Palazzo Resort-Hotel-Casino and Sands Expo and Convention Center in Las Vegas, as well as Sands Casino Resort Bethlehem(TM) in Eastern Pennsylvania. Internationally, it owns three Venetian and Sands branded resorts in Macao as well as Marina Bay Sands in Singapore, and is the master developer of the Cotai Strip, a Macau development that is slated to include 21,000 hotel rooms to be flown under various flags including St. Regis, Sheraton, Shangri-La, Traders, Hilton, Conrad, Fairmont, Raffles, Holiday Inn, and InterContinental.