Las Vegas Sands loan faces bumps, may pressure IPO

By Sui-Lee Wee and Stephen Aldred

HONG KONG (Reuters) - Las Vegas Sands Corp (LVS.N) may struggle to secure up to $2 billion in financing for mothballed projects and dent already-lowered valuations for the planned Hong Kong initial public offering of its Macau operations, bankers and analysts said.

The world's most valuable casino operator needs the money to complete its two suspended projects in Macau, which have become major embarrassments and eyesores as the company prepares to raise up to $2.5 billion in a public offering.

Sands Chief Executive Sheldon Adelson told Reuters in an interview last week that the company is in the process of securing financing to complete the two projects, which include mid-tier hotel brands, by 2011.

A source familiar with the situation said on Friday the sites are key to Sands' goal of creating the critical mass needed to make Macau a major destination market.

The source said Sands would prefer to secure the project financing ahead of the IPO but is not depending on it.

"This is certainly a more challenging IPO and there's a lot of risks to it," said Susquehanna analyst Robert LaFleur, comparing the Sands IPO with a similar one for the less debt-laden Wynn Macau Ltd (1128.HK) earlier this month. "They're already partially pregnant with their Macau projects."

Highly leveraged Sands has come close to violating loan covenants and suspended work on several projects as it navigates the credit crisis that began last year. Chairman and founder Sheldon Adelson has injected $1 billion of his own money into the casino operator.

Sands' high debt load means its stock needs to be valued more cheaply than Wynn Macau to attract investors.

"IPOs are still in demand in a buoyant market but one has to offer its shares at an even more attractive price to lure investment interest if its fundamentals are not so sound," said Ben Kwong, chief operating officer of KGI Asia.

The buzz among bankers is that the loan could fail to materialize before year-end and mark another setback for the company as it prepares to pass around the IPO hat.

Sands is tapping the loan market almost one year after canceling a $5.25 billion financing during the global crisis.

Its timing for the new loans is hardly ideal, however, as banks will be closing their books ahead of year-end and are reluctant to lend out in such huge sums, bankers said.

"The banks are taking a wait-and-see approach," said a senior banker from a Chinese bank. "Many are waiting to see which banks will indicate that they will take a substantial ticket."

ASIA ASSETS

Sands wants the money as the company, with long-term debt of about $10.6 billion, tries to wow the world with its gaming assets in Asia -- a huge growth market where it has several projects in Macau and one in Singapore.