Sands amends Macau loans, clears way for Asian IPO

LOS ANGELES (Reuters) - Casino operator Las Vegas Sands Corp (LVS.N) said on Thursday that its lenders agreed to amend its $3.3 billion Macau credit facility, clearing the way for an initial public offering in Hong Kong.

The agreement, first proposed to lenders last month, boosted the company's stock more than 12 percent to $13.79 on the New York Stock Exchange.

"It gives them, obviously, more flexibility over in Macau and makes an IPO probably more likely," said Majestic Research analyst Matthew Jacob.

Sands said the deal includes six quarters of relief from its loan covenants and allows it to sell a minority interest in its Macau operations.

"The concessions ... give investors more confidence in the company's liquidity," Jacob said.

The Macau amendment permits Sands to issue up to $1 billion of senior secured notes. It must use the proceeds to pay down the credit facility. It also allows Sands to issue $500 million of senior unsecured notes, once its leverage ratio gets lower.

The amendment increases the interest rate for the loans under the credit facility to LIBOR plus 5.5 percent per year.

If the company sells the stake in its Macau operations and prepays $500 million of outstanding loans, the interest rate would drop to LIBOR plus 4.5 percent per year.

Macau bank group's willingness to amend the facility reflects its belief in Sands's strategy and the resumption of growth in Macau, J.P. Morgan analyst Joseph Greff said in a research note.

Las Vegas-based Sands operates the Palazzo and Venetian resorts on the Las Vegas Strip, two casinos in the Chinese gambling enclave of Macau and a casino in Pennsylvania.

The company said it is on track to open its next gambling resort, in Singapore, in the first quarter of next year.

Sands, which has come close to violating loan agreements and has suspended work on several projects, said the amendment increases the maximum leverage ratio covenant under the Macau credit facility by 1 for the four quarters beginning July 1, 2009 and by 0.5 for the two quarters beginning July 1, 2010.

Despite a rally over the past two weeks, shares of Sands are down about 77 percent from the 52-week high of $59 set last August.

(Reporting by Deena Beasley; Editing by Robert MacMillan and Richard Chang)