Sands Casino to Halt Casino Projects

Written by JohnH | Wednesday, November 12th, 2008

The Las Vegas Sands Corporation has announced it will halt casino developments across the world and has landed more than $2 billion in capitol funding commitments as it struggles to avoid defaulting on bank agreements that require the corporation to maintain a certain level of cash flow.

According to analysts the announcement, which was made after the close of the stock market, is expected to calm investors. Shares in Las Vegas Sands are down from $148 last October to around $8 this week. Sheldon Adelson, the company’s billionaire chief executive, has been forced to slash his expansion plan and search for new funding due to the sharp decline in the stock price and climbing debt.

To add to investors fears, Sands reported Monday a third quarter net loss of $32.2 million. The company has been burdened by the skyrocketing costs related to the opening of its signature resort in Macau, as well as big wins by its casino customers. The company reported its third quarter net revenue rose 67%, in a report to the Securities and Exchange Commission.

In a warning a few days ago, Sands – owner of the Venetian hotel and casino in Las Vegas – said it might not survive a worsening economic crisis primarily due to its debt load which is more than $10 billion.

Last month, in an effort to keep the company from defaulting on a debt covenant, Mr. Adelson loaned the company $475 million and worked to procure $5 billion with the plan to refinance existing debt and fund its Macau development.

By putting the brakes on construction and indefinitely delaying its St. Regis 400 unit, $600 million condominium project on the Las Vegas strip, the Sands will save $1.8 billion. Part of that plan will include temporarily delaying a portion of its $12 billion Macau resort and casino development and will curb plans for its casino located in Bethlehem, PA by delaying the accompanying hotel and retail openings. The announced delays will also affect Starwood Hotels & Resorts Worldwide, Inc., which owns the Sheraton and St. Regis brands.

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