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Gaming Guru

Rod Smith
 

Las Vegas Sands Files for IPO

7 September 2004

LAS VEGAS -- Las Vegas Sands on Friday afternoon filed a $350 million initial public offering with the U.S. Securities and Exchange Commission that could be used to underwrite the new Palazzo adjacent to The Venetian.

The company, which owns The Venetian in Las Vegas and the Sands Macau, is controlled by developer Sheldon Adelson, who 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.

In addition, Deutsche Bank analyst Andrew Zarnett said, the expansion will create what will be the world's third-largest gaming company, once the recently announced MGM Mirage-Mandalay Resort Group and Harrah's Entertainment-Caesars Entertainment mergers are completed.

Filing on the eve of the Labor Day holiday was unusual, but companies usually time going public with predictably positive market developments to improve their pricing prospects, he said.

"Las Vegas is now entering a very strong part of its year as conventions return from the summer doldrums. It's seasonally the best time for them. They should have improving fundamentals and you always like to be showing off results when you're coming to market," Zarnett said.

The offering will trade on the New York Stock Exchange, but the company did not suggest an opening price, the number of shares to be sold or percentage of the company that will go public.

However, Zarnett said the offering should boost Adelson's prospects for further expansion, in addition to providing the financing to proceed with the Palazzo.

"In business, you keep score by your financial performance and a lot of investors are not that aware of his performance because his public financing has all been in bonds," Zarnett said.

"This (IPO) will give (Adelson) a larger platform to show off his firm and its success, and should put him in a good position to buy other assets if he so chooses," he said.

Zarnett said the company has had a great run since it opened The Venetian in 1999, and has some of the best growth prospects in the gaming industry based on its business model and cross marketing between hotel-casinos and convention centers.

The proceeds of the IPO can be used to build projects in Asia and the United Kingdom, the filing said. Las Vegas Sands is developing a major hotel-casino in Macau.

Last month, the company announced it was planning the public offering to raise money for its expansion projects, and also said it was opening a $1 billion credit line for its Venetian Casino Resort subsidiary.

Joe Greff, gaming analyst at Fulcrum Global Partners, an independent Wall Street investment research firm, said the public stock offering has been much-anticipated and should be well-received on Wall Street, both because of the economic boom in Las Vegas and the financial track record of The Venetian.

Goldman Sachs Group is managing the offering.

Spokesman Ron Reese could not be reached for comment.