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Gaming Guru

Brendan Riley
 

Board Backs Sands Offering

4 October 2004

CARSON CITY -- The Nevada Gaming Control Board on Friday endorsed a common stock offering designed to raise $575 million for the company building the $1.6 billion Palazzo megaresort on the Strip and expanding to Macau.

The board's endorsement of the Las Vegas Sands's initial public offering and an expected approval Oct. 21 from the board's parent state Gaming Commission are subject to federal Securities and Exchange Commission comment and ultimate approval.

Marketing of the offering is planned for late October.

Sands attorney Greg Giordano said depending on how the IPO is structured, its total value could increase by another 20 percent. But Harry Miltenberger, Sands vice president for finance, said a boost to nearly $700 million isn't likely even though that option would exist.

Brad Stone, Sands executive vice president, said the offering, to be managed by Goldman Sachs Group, is the latest step in a plan that took shape in 1997 when Las Vegas Sands began filing with the SEC as a public company.

Sands, which owns The Venetian in Las Vegas and the Sands Macau in Macau, is controlled by entrepreneur Sheldon Adelson, who founded the Comdex technology trade show before buying the Sands in 1989. He sold Comdex in 1995. Adelson also controls the Sands Expo and Convention Center.

The combined Palazzo, Venetian and Sands Expo and Convention Center will be the largest resort and hotel complex in the world, with more than 7,000 hotel rooms and suites.

Stone said proceeds from the offering will give the company flexibility for future projects but didn't elaborate. Besides the Palazzo, which will link to The Venetian, the company also is considering a major expansion of its new Macau resort, the first American-owned casino in Asia.

The company also is opening a $1 billion credit line for its Venetian subsidiary.

Las Vegas Sands President Bill Weidner, responding to Control Board Chairman Dennis Neilander's request for an update on Macau, said the $240 million Sands Macau is doing well since its opening last May and is working to increase its share of high-end gamblers.

Weidner also said the club is adding more slot machines and will try to alter the view by many Chinese gamblers that slots are "old tigers" that eat up money and don't return anything.

Adelson's long-term plans for Macau include a huge resort complex of several hotels-casinos that will be patterned after the Strip. Weidner said the plan, although big, "could never compete" with the Strip's allure, and will help draw more Chinese gamblers to Las Vegas.

Control Board member Bobby Siller praised the Sands executives for doing "the right thing" and working closely with the board on the Macau venture, getting through initial problems such as a $3.85 million loss to a veteran Hong Kong card cheater.

Siller also said regulators remain concerned about money-laundering and unsavory vendors who provide supplies to the resort in the Chinese coastal territory and former Portuguese colony, where gambling is the top industry.

"Because you were first, the world was watching," he added.

Macau, less than an hour by boat from Hong Kong, also has attracted major U.S. investors such as Wynn Resorts Ltd. and MGM Mirage.

Weidner said the Sands Macau works closely with Chinese authorities, and Neilander said he's impressed by that cooperation. He said Macau is not unlike what Nevada was like 40 years ago, when the state was stepping up efforts to get rid of mob influence in the casino industry.