he company plans to sell convertible bonds with a coupon as high as 16 % to hedge funds and pension fund managers, the Hong Kong-based English-language newspaper said Satusday, citing people who have seen documents prepared by Sands’ investment bank, Goldman Sachs Group Inc.
The sale is linked to plans to raise us$ 2.5 billion in a Hong Kong initial public offering of the Las Vegas-based company’s Macau unit next year, the Post said. Investors can choose to swap the bonds for those shares or continue to receive interest payments, it said.
Its spokesman Ron Reese declined to comment on the report, referring inquiries to comments Chief Operating Officer Sheldon Adelson made during a recent earnings conference call. Goldman Sachs spokesman Edward Naylor had no comment when contacted by phone.
The company posted a us$ 175.9 million second-quarter loss on July 30, including a charge to reflect lower-than-projected proceeds from the sale of its Shoppes at the Palazzo, which opened last year amid a slump in travel to Las Vegas.
Las Vegas Sands’ debt was put under review for possible downgrade yesterday by Moody’s Investors Service, which said in a statement the results raised concerns the company may not remain in compliance with financial covenants. The current Moody’s rating of B3 is six levels below investment grade.
Shares of the gaming company plunged 16 % to us$ 9.35 in New York Stock Exchange composite trading yesterday, the biggest drop since April 7. The stock has gained 58 % this year.
Las Vegas Sands, which gets more than two-thirds of its revenue from Macau, is seeking funds to restart work on a us$ 12 billion, 20,000-room hotel and casino complex on Macau’s Cotai Strip. Construction of the project was suspended in November. Canceled projects and laid-off staff at casinos helped push Macau’s unemployment rate to a two-year high of 3.8 % in March.
Casino operators including Stanley Ho’s SJM Holdings Ltd. and U.S-based competitors Las Vegas Sands and Wynn Resorts Ltd. may get a boost if China loosens its visa rules after last week’s selection of Fernando Chui as Macau’s new leader.
Chui takes over as the city’s casino industry seeks more Chinese visitors to reverse a slump that cut jobs and revenue as visitor numbers fell. China in May 2008 limited its citizens to one Macau trip a month, and later cut that to once in two months, eroding the main source of casinos customers.
Macau’s visitor numbers fell 11 % year on year in the first half of 2009, according to the Macau Statistics and Census Service. Casino revenues have been slumping, down 12 % in the second quarter from a year earlier, according to the Macau Gaming Inspection and Co-ordination Bureau web site.