Las Vegas Sands (LVS) has raised about $5 billion of capital through debt and equity financing to restart its Macau casino expansion projects that it had been compelled to close down last year due to financial constraints.
Las Vegas Sands’ Macau unit, Sands China Ltd. was listed on the Hong Kong stock exchange after the completion of an initial public offering (IPO) early Monday. The company raised $3.1 billion from this offering. This included $2.5 billion from listing and $600 million raised in a pre-IPO exchangeable bond financing transaction completed in September.
The company has also secured $1.75 billion in project financing. This together with $500 million in proceeds from the Sand China IPO will be used to restart and complete its 6,000-room casino project on the Cotai Strip in Macau, which will feature Shangri-La, Traders and Sheraton hotel brands.
Macau is the only Chinese city where gambling is legal. It has become an attractive destination for casino companies such as Las Vegas Sands, Wynn Resorts (WYNN) and MGM Mirage (MGM), who are investing billions for expansion on this island. Macau has survived the economic downturn relatively well.
Macau has generated HK$105.6 billion ($13.5 billion) of gross gaming revenue in 2008 — more than double the revenue generated by the Las Vegas strip. Also, visa restrictions have recently been slackened by Beijing to allow mainland tourists to visit Macau once a month rather than twice a year.
The capital bolstering initiatives augur well for Las Vegas Sands, which has a robust development pipeline, with projects in Macau, Las Vegas, Singapore and Pennsylvania.
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