CEO Adelson invests $475 million in Sands
LOS ANGELES (Reuters) - Sheldon Adelson, majority owner of Las Vegas Sands Corp (LVS.N), said on Tuesday his family has invested $475 million in the casino operator so it could pay down debt and maintain leverage ratios.
But the company is still seeking financing for its Macau projects.
"Had the availability of money been more plentiful, we would have gone out and borrowed," said Adelson, who is also the company's chairman and chief executive. "This way, I am minimizing the dilution to shareholders."
The Adelson investment will be in the form of convertible senior notes maturing October 1, 2013. The notes have an annual interest rate of 6.5 percent and are convertible into common stock at a price of $49.65.
Shares of Sands, which have fallen 76 percent since last October, rose 9 percent on Tuesday to close at $36.11 on the New York Stock Exchange before the financing plan was announced.
News of the investment came as the company faced a deadline for meeting covenants on its more than $4 billion revolving credit line. Had Sands sought a waiver of those covenants, interest costs would likely have risen.
Sands said the $475 million investment, along with a $50 million capital contribution to its Las Vegas operations, limits its debt to no more than 7.5 times trailing cash flow.
The potential gap arose as sagging U.S. consumer confidence and spending power has sapped business in Las Vegas, where Sands operates the Palazzo and Venetian resorts, as well as the Sands Expo and Convention Center.
"Our occupancy is down, but only by single digits," Adelson said.
In Macau, the only part of China where gambling is legal, the company has operated a casino since 2004, and last August opened a second property, the Venetian Macao -- the world's biggest casino.
Sands is also developing a string of resorts in a part of Macau dubbed the Cotai Strip, including a recently opened Four Seasons hotel.
Adelson said Sands is reconsidering efforts to obtain $5.25 billion in financing for the Cotai Strip and is likely to instead seek smaller-scale financing for individual projects.
He said the company at this point would prefer to keep in place current Macau debt terms, rather than renegotiate an entirely new package.
Adelson also said the company has the option of stepping up planned sales of assets including shopping malls.
"Our strategy is alive and well -- we sell off non-core assets in order to pay off debt for core assets," he said.
He said Shangri-La and Sheraton hotels will open on the Cotai Strip in two stages next year, but the Chinese government has yet to approve plans for two other Cotai projects, dubbed sites 7 and 8.
Elsewhere, the company is building a casino project in Singapore slated to open next December and a 126-acre casino resort development on the site of the former Bethlehem Steel plant in Bethlehem, Pennsylvania, which is expected to open next July.
Sands said that if its fourth-quarter earnings before interest, taxes, depreciation and amortization also fail to meet debt covenant requirements, its options would include raising additional capital and obtaining amendments or waivers from lenders.
(Editing by Gary Hill & Ian Geoghegan)
