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Arnold M. Knightly

LV Sands, Wynn alter credit pacts

22 April 2009

and Arnold M. Knightly

LAS VEGAS, Nevada -- Casino operators Las Vegas Sands Corp. and Wynn Resorts Ltd. recently took steps to amend how the companies borrow money from their credit facilities.

The moves could help Wynn and Sands fend off the financial turmoil that has befallen much of the gaming industry's major players, including MGM Mirage, Harrah's Entertainment and Station Casinos, which are trying to restructure massive debt.

Las Vegas Sands, which operates The Venetian, Palazzo and two resorts in Macau, reached an agreement with its lenders covering its $5 billion senior credit facility, a filing with the Securities and Exchange Commission shows. The amendment allows Las Vegas Sands to buy back up to $800 million in old debt.

Last year, Las Vegas Sands sold additional stock that helped the company add $2.1 billion in capitalization.

Under Wynn's amendment, lenders agreed to waive leverage covenants until June 2011 but increases the thresholds after that date.

Wynn also gained flexibility for its interest coverage ratios and extended the maturity on approximately $610 million of the remaining $697 million revolving commitments from August 2011 to July 2013.

Wynn, which operates Wynn Las Vegas, Encore and Wynn Macau, has about $1.3 billion in cash and $4.5 billion in long-term debt.

Last month, Wynn raised $175 million in a public offering of more than 9.6 million shares of common stock.

Separately, while Station Casinos continues to negotiate a potential bankruptcy with its creditors, one of its joint ventures held outside the company could be headed toward a possible restructuring of its own.

Moody's Investor Service on Tuesday downgraded Green Valley Ranch Resort's probability of default rating to Caa3, or in poor standing, from Caa1, which reflects a probable risk of default.

The Henderson casino, which has $760 million debts and posted a $23.2 million loss last year, is a joint venture between Station Casinos and the Greenspun Corp.

The debt rating firm said in a note to investors that the downgrade "considers the increased likelihood" the property will not be able to meet its debt payments this year without a cash input from outside the property. Additionally, its "capital structure is not sustainable ... and may require a restructuring."

Moody's also downgraded the property's corporate family rating to Ca, or extremely speculative, from Caa1.

The rating firm said the lowered rating reflects the lender's potential loss if the property defaults.

"Moody's believes that in the event of default, lenders should receive a lower than average recovery given (Green Valley Ranch's) current operating performance and continued exposure to very weak demand trends," Keith Foley, Moody's senior vice president, wrote in a note to investors.

The property's net revenues dropped 12 percent last year to $245 million from $277.8 million.

Also on Tuesday, Bloomberg News reported that Standard & Poor's Ratings Services raised its corporate-credit rating on Harrah's Entertainment Inc. to "CCC" from "selective default." The rating outlook is "negative."

LV Sands, Wynn alter credit pacts is republished from