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Howard Stutz

Las Vegas Sands raises $5 billion for Macau

30 November 2009

LAS VEGAS, Nevada -- Las Vegas Sands Corp. said today it raised $5 billion in debt and equity financing in Asia and will use a portion of the proceeds to restart and complete construction of resort and casino complex on Macau's Cotai Strip.

In a statement, the company said it listed 30 percent of its Macau holdings on the Hong Kong Stock Exchange in an initial public offering that raised $2.5 billion, as well as $600 million in pre-IPO financing.

Shares of the company, which began trading Monday morning in Hong Kong, tumbled 10.2 percent after Dubai World's possible default hurt investor confidence.

Las Vegas Sands said it would use $500 million of the IPO proceeds, along with $1.75 billion in project financing, to complete the Cotai Strip site near the Venetian Macau that will house the combined Shangri-La, Traders, and Sheraton resort complex.

"Our ability to add more properties to the Cotai Strip will enhance visitation from all parts of the Asia-Pacific region and significantly increase the overall length-of-stay in Macau," Las Vegas Sands Chairman and Chief Executive Officer Sheldon Adelson said in a statement.

Construction of the 13.3 million square foot complex was halted a year ago when financing dried up and Las Vegas Sands ran into financial difficulties nearly having to file bankruptcy. The Cotai Strip project is 65 percent complete, the company said.

The company said the development would be finished in phases. Phase one, is expected to open in June 2011 with 3,700 hotel rooms and suites from the Shangri-La, Traders and Sheraton hotel brands. A theater and retail, gaming and convention facilities are included.

The second phase, planned for December 2011, will house a 2,300-room Sheraton hotel tower, as well as other non-gaming amenities. Timing for completion of a third phase to include a St. Regis hotel and serviced-apartments has yet to be determined.

Adelson said the IPO's completion could still bring an additional $250 million in proceeds should the 10 percent over-allotment of shares be exercised by the underwriters.

Las Vegas Sands will use a portion of the proceeds to increase its balance sheet and remove debt covenant concerns related to the company.

One analyst said last week's news that Dubai World was seeking a stay on some $60 billion in debt repayments had an impact on the company's first day on the Hong Kong Stock Exchange.

Las Vegas-based independent strategist Jonathan Galaviz told Bloomberg News a possible default by Dubai World contributed to "some negative sentiment" toward tourism-related companies.

"Half of Dubai's story is tourism," Galaviz said. "There will probably be some negative sentiment toward tourism assets globally, such as casino operations, as Dubai gets squared away."