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Best of Howard Stutz

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Howard Stutz
 

Las Vegas Sands plans to repurchase $2 billion in shares

7 June 2013

LAS VEGAS -- Las Vegas Sands Corp. told investors the company plans to repurchase $2 billion on the company’s outstanding shares over a multi-year period, but analysts said investors might be disappointed by the figure.

The company announced the buy-back program following its annual meeting in New York City late Wednesday. The authorization covers roughly 9 percent of the Las Vegas Sands outstanding shares and 4 percent of the company’s market capitalization of more than $46.5 billion.

In a statement, Las Vegas Sands didn’t give a timeline for the program. In 2012, the company, which operates casinos in Las Vegas, Macau, Singapore and Pennsylvania, returned nearly $3.1 billion of capital to shareholders.

“We believe the implementation of our share repurchase program, together with our previously established recurring dividend program, will allow us to maximize returns to shareholders in the years ahead,” Las Vegas Sands Chairman Sheldon Adelson said in a statement.

Adelson and his family own more than 53 percent of Las Vegas Sands.

Analysts said investors wanted a larger figure from a company that reported more than $11.13 billion in total revenues in 2012.

“While the share repurchase program is a positive, the $2 billion repurchase amount may be viewed as a disappointment given there were estimates that a greater amount was possible based on the company’s low debt versus cash flow levels,” RBC Capital Markets gaming analyst John Kempf told investors.

As of March 31, Las Vegas Sands’ total debt was $9.83 billion.

“The company could add more leverage without risking the balance sheet,” Kempf said.

Deutsche Bank gaming analyst Carlo Santarelli said bearish investors “are likely to view the dollar amount as not enough.”

Santarelli said the buyback program was a way of pleasing investors.

“Las Vegas Sands has meaningful growth trajectory, upside estimate revision potential, a healthy balance sheet, a strong future development pipeline, and cash flow being deployed responsibly to dividends, which should continue to grow,” he said.

Susquehanna International Group gaming analyst Rachael Rothman said the buy-back program reassures shareholders “that the company continues to make good on their promise to be more proactive about returning capital.”

Las Vegas Sands’ board established a $1 per share per year recurring dividend in 2012. The dividend was increased to $1.40 per share this year.

Also Wednesday, Las Vegas Sands said it received approval from Chinese officials to sell 300 co-op style apartments at the Four Seasons Macau. Analysts said sales proceeds could be worth from $775 million to more than $1 billion to the company.

During the shareholders meeting, the company said it is negotiating with the government of Spain on a several issues surrounding the company’s planned $35 billion, 12 hotel-casino development near Madrid that has been named EuroVegas.

Rothman said there is a “laundry list of milestones that must be achieved before significant capital expenditures will be contemplated.”

Shares of Las Vegas Sands fell 32 cents, or 0.56 percent, to close at $57.03 in Thursday trade on the New York Stock Exchange.