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Best of Howard Stutz

Gaming Guru

Howard Stutz

What's the course for LV Sands?

30 March 2009

LAS VEGAS, Nevada -- Analysts are starting to wonder whether Las Vegas Sands Corp. is playing out its last hand or is about to put a bad beat on the competition.

Both sides of the poker game surfaced last week.

First, Executive Vice President Brad Stone, head of the company's construction division, quit. Stone is the second high-level officer to walk away from the casino operator this month. His move followed the March 8 forced resignation of former President Bill Weidner.

Stone's leaving frayed some nerves in Singapore, where Las Vegas Sands is building the $5 billion Marina Bay Sands. The Southeast Asian city-state is banking much of its tourism future on the success of the resort complex, which is scheduled to open by December.

"Losing Brad is a big deal," JP Morgan gaming analyst Joe Greff told investors, citing Stone's critical role on the construction side.

Within the same Securities and Exchange Commission filing that discussed Stone came word that Las Vegas Sands was talking with lenders about repurchasing $800 million of its debt. The move would help solve a potential covenant breach. But Chairman and Chief Executive Officer Sheldon Adelson told The Associated Press he was still evaluating the idea.

The two events exemplify the conundrum that Las Vegas Sands has become.

Stone's departure is clearly a negative. But the debt repurchase, which could help shore up the company's troubled balance sheet, was a welcome positive sign. Las Vegas Sands shares shot up on the news and analysts praised the possibility.

"It is a prudent move, and one, depending on price, that could be fairly successful," KDP Investment analyst Barbara Cappaert wrote in a research note.

But Adelson won't commit to the action, and the stock regressed the next day.

Weidner's departure, after months of in-house bickering over the company's direction, left Adelson, the 75-year-old billionaire and founder, calling the shots. He said so during an investment forum, declaring that Sands' main visionary and top strategist -- himself -- remained on board.

One longtime company board member resigned over the Weidner matter.

There is also Macau for Adelson to deal with. Chinese government-backed visa restrictions on visitors from the mainland have sapped a large source of the customer base for the Sands Macau and The Venetian Macau.

Adelson is captain of the ship and charting the course.

What remains unknown, however, is whether he will ultimately be likened to Sir Francis Drake, the first sea captain to successfully circumnavigate the globe, or Joseph Hazelwood, who commanded the Exxon Valdez oil tanker into Bligh Reef and spoiled Prince William Sound.

Time will tell.