MGM MGM Resorts International

Sands China Ltd., a majority owned subsidiary of Las Vegas Sands Corp. (LVS) announced that it will receive $3.5 billion in loan under a new credit facility. The unit will also have the option to raise an additional $1.0 billion of senior secured credit facilities. The transaction awaits some approvals from the Macau Government and final loan documentation.

The new credit facility will mature in 5 years at an interest rate lower than the prior credit. The agreement includes a $5.0 billion five-year term loan and an undrawn US$500 million five-year revolver.

Besides paying down the company’s high-cost debt, the new credit facility will increase available fund and extend the maturity period of debt.

The company plans to use this new debt along with cash on hand to retire outstanding balances and commitments on Sands China's existing $2.7 billion Venetian Macau Credit Facility and its $1.75 billion Venetian Orient Limited Credit Facility.

Moreover, the proceeds will be used to fund the construction of the first two phases of Parcels 5 and 6 on the Cotai Strip in Macau. Parcels 5 and 6, when complete, will represent a significant expansion of Las Vegas Sands’ Cotai presence and are expected to draw more visitors. The entire site is expected to open fully in 2014.

The pricing of the new credit facility is presently subject to a pricing grid. After a six-month introductory period, the initial pricing of the facility will be determined using the LIBOR Rate plus a spread of 200 basis points. However, pricing of any incremental borrowing under further credit facilities would be subject to market conditions.

As of March 31, 2011, Las Vegas Sands had unrestricted cash balance and short-term investment of $3.13 billion, while restricted cash balances were $658.9 million. Of the restricted cash balances, $643.2 million were for construction of Shangi-La, Traders, Sheraton, St. Regis development on Parcels 5 and 6 in Macau.   

Total debt outstanding, including the current portion, was $10.10 billion at the end of the first quarter. Scheduled principal payments for full fiscal 2011 are $652.3 million.

Las Vegas Sands currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. The company’s close competitors include Wynn Resorts Ltd. (WYNN) and MGM Resorts International (MGM). 

 
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