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Best of Howard Stutz

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Howard Stutz
 

Las Vegas Sands Gets Loan for Macau

2 June 2006

LAS VEGAS -- Las Vegas Sands Corp. has secured a $2.5 billion financing package to fund its gaming projects in Macau. Analysts consider the loan, which comes from six different banks, to be the largest single credit facility ever given to a nongovernment entity in China.

The loaned money will be used to fund an expansion of the casino at the existing Sands Macau and for construction of the $3 billion Venetian Macau, now under construction on Cotai, which is just minutes south of Macau by car. The Sands expansion is expected to finish this year; the Venetian Macau is scheduled to open in 2007.

A portion of the money also will be used to build a 400-room Four Seasons hotel adjacent to the Venetian Macau.

"The primary purpose (of the loan) was the Venetian Macau, but this goes a long way toward our financing initiatives in China," Las Vegas Sands Chief Financial Officer Scott Henry said this week.

The loan package consists of a $1.2 billion seven-year term loan, a $700 million six-year term loan, a $100 million five-year term loan and $500 million in a five-year revolving credit line.

Las Vegas Sands, through company Chairman Sheldon Adelson, is directing development of the Cotai Strip. The company controls seven land parcels on Cotai and has encouraged some of the world's largest hotel companies to open locations on the developing area.

North American hotel companies, such as Hilton, Starwood and Four Seasons, will join Asian hotel company Shangri-La to bring some of the world's most recognizable brands -- Sheraton, St. Regis, Intercontinental, Conrad and Holiday Inn -- to Cotai.

Las Vegas Sands will build the hotel projects. The hotel operators will manage their own rooms and restaurants while Las Vegas Sands will run the properties' casinos and showrooms.

By decade's end, Cotai is expected to be home to more than 20,000 hotel rooms, casinos, showrooms, restaurants, convention space, retail and a 15,000-seat sports arena.

The loan deal was signed last week, the same day the Singapore government awarded Las Vegas Sands the rights to build a $3.6 billion casino and resort in the city-state.

Henry said the company filed a form 8-K with the U.S. Securities and Exchange to announce the loan package, so the deal wouldn't compete with the Singapore casino announcement.

Goldman Sachs Credit Partners was the leading financial institution on the loan and was joined by Lehman Bros., Citigroup Global, Bank of Nova Scotia in Canada, Banco Nacional Ultramarino from Portugal and Japan's Sumitomo Mitsui Banking Corp.

The Standard, a Chinese business newspaper, reported that Las Vegas Sands spent six months seeking banks willing to fund its concept of transforming Macau into a convention and resort destination.

Henry said Citigroup is making its initial entry into the Chinese gaming market.

Citigroup managing director Evan Ladouceur said the financial institution believes in what Las Vegas Sands is trying to do in China.

"This is the first transaction in Macau for Citigroup, but we have a lot of respect for Las Vegas Sands and their execution in Macau and on Cotai.

Meanwhile, Las Vegas Sands may have no trouble financing its Marina Bay Sands in Singapore. According to a story in the International Herald Tribune, the company has received between six and nine lending proposals for the project, which includes a 2,500-room hotel, 1 million square feet of convention space and 1 million square feet of retail.

Several of the same banks financing Las Vegas Sands in China have offered to participate in Singapore.

Las Vegas Sands President Bill Weidner said the company would finance the project without the Singapore government's help.

On Thursday, Las Vegas Sands shares closed at $70.95 in trading on the New York Stock Exchange, up 34 cents or 0.48 percent.