Casino firm signs credit facility deal
Posted by Gavin Smith on 18 Aug 2009 at 16:08
Casino giant Las Vegas sands has agreed an amendment to a $3.3 billion credit facility which means it can spin off its Macau operations.
The Financial Times reports the company, owned by billionaire businessman Sheldon Adelson, has said the agreement allows it to sell a minority interest of the business, while $500 million of the proceeds has to be used to repay debts.
Las Vegas Sands has recently been considering a Hong Kong initial public offering of its Macau interests.
The company has been struggling to keep up with debts and announced its lenders have agreed to give it six quarters of relief from its covenants, plus the chance to issue as much as $1.5 billion in bonds.
The Financial Times said Adelson declared the deal was vital in terms of maintaining and improving liquidity.
"The amendment significantly increases our financial flexibility and permits us to pursue a potential listing of a minority interest in our Macao operations on an Asian stock exchange," he said.
Macau has been battling the economic downturn and tighter visa restrictions on mainland visitors imposed by Beijing.
Analysts say the former Portuguese enclave is going through its toughest times since the market was opened up to international investors in 2002.
However, some have said the enclave could bounce back quicker than the likes of Las Vegas.
Las Vegas Sands has suspended construction on some projects and has also laid off thousands of workers as it battles the downturn. The new deal could now see construction restart.
Billy Ng, gaming analyst at JPMorgan, was quoted by the paper as saying: "Las Vegas Sands needs to do the IPO to raise funds. The listing would help it to solve some of its financial problems,"
The company also has permission to raise up to one billion dollars in senior secured notes, on the condition that net proceeds from this is used to pay down outstanding loans.
The firm also has the option of issuing $500 million in senior secured or unsecured notes if its leverage ratio decreases.
The amendment also increases the annual interest rate for the loans to Libor plus 5.5 per cent, the company added.
According to the Financial Times report the rate will drop to Libor plus 4.5 per cent if the firm manages to list the Macau operations and pre-pays $500 million in outstanding loans.
Elsewhere, Melco Crown entertainment has raised $200 million through selling depositary shares in America in order to repay debts.
