Las Vegas Sands Shares Surge On $800M Debt Buyback Report
3:06 pm ET 03/24/2009 - Dow Jones
By A.D. Pruitt
Of Dow Jones Newswires
NEW YORK (Dow Jones)--A possible debt buyback by a Las Vegas Sands (LVS) subsidiary is giving Wall Street hopes the casino operator won't run afoul of its debt covenants amid a brutal gaming environment.
The company's stock soared nearly 17% to $3.10 in recent trading following a report by Standard & Poor's Leveraged Commentary & Data saying Goldman Sachs launched early Tuesday a $800 million buyback deal involving term loans for Las Vegas Sands LLC, the issuing entity for the company's properties in Sin City.
A Las Vegas Sands spokesman wasn't available for comment on the report, which cited anonymous sources.
"The buybacks, if allowed, could ease leverage ratios at the Las Vegas subsidiary. This, in turn, would reduce the need in the future for any covenant relief should operating performance fall further," said Barbara Cappaert, an analyst at KDP Investment Advisors.
The news comes a week after S&P cut its credit ratings on Las Vegas Sands to the brink of highly speculative territory as the company continues to deal with a cash crunch as well as slump in Las Vegas and Macau.
S&P credit analyst Ben Bubeck raised concerns about Las Vegas Sands being able to remain in compliance with debt covenants and fund its development pipeline, which already has been pared because of the downturn and funding problems.
Last month, Chief Operating Officer William P. Weidner said Sands was focused on maximizing cash flow from its Las Vegas and Macau casinos and trying to sell noncore assets. The company had suspended work on other projects until the operating and financing environments improve.
If the deal is executed, Las Vegas Sands is "no longer under the gun to (sell) assets by a certain date," while avoiding covenant violations, said Lawrence Klatzkin, an analyst at Jefferies & Co. |
