So while I still think Las Vegas as a tourist attraction, will take much time to get back to "normal" and the casinos are effectively handing away rooms (I literally saw a deal from Burbank, CA to Wynn Resort ON PRIVATE JET including HOTEL for just over $500), survival no longer seems to be as much of an issue. [Dec 23, 2008: Wynn Encore Casino Struggling to Fill Rooms During Launch] If in the greatest collapse of housing and commercial real estate almost none of our public companies in those sectors go bankrupt it appears "creative destruction" is something from a bygone era.
In this space specifically we've noted some amendments of credit terms [Apr 22, 2009: Wynn Resorts, Las Vegas Sands Amend Credit Terms] and it continues almost monthly. Yesterday, LVS announced an issuement of bonds which, while dilutive to current shareholders, continues to "push off any date of reckoning" on their balance sheet.
- Las Vegas Sands Corp (LVS), one of the world's largest casino companies, has secured commitments to raise up to $600 million through the sale of exchangeable bonds, the company said on Wednesday.
- The bonds will have to be swapped for common shares of the company's Macau unit after the unit's pending initial public offering on the Hong Kong Stock Exchange.
- The sale is part of highly leveraged Las Vegas Sands' efforts to boost its financial strength, the company said. It recently amended its $3.3 billion Macau credit facility and plans to take one of its subsidiaries public.
- The financing will prevent looming U.S. debt covenant breaks in the third and fourth quarter, Bernstein Research analyst Janet Brashear said in a research note. "Without this stop-gap measure, we had projected that LVS would have approximately $100 million too much debt at September 30 and approximately $400 million too much debt at December 31," she wrote.
- "Completion of the Hong Kong IPO is the last hurdle, but today's development is material as it probably further reduces near-term covenant risk," Bank of America analyst Shaun Kelley said in a research note.
I expect continued volatility in the space, but Las Vegas Sands (LVS) is looking more interesting for the long term. However, after such a run - I'd like to revisit it when (if) the stock market pulls back and we see a single digit price level again. Putting a valuation on this name is difficult - all I know is it is now appears in America, failure is almost never an option. Just don't call us Japan.