Sept. 2 (Bloomberg) -- Las Vegas Sands Corp. is selling as much as $600 million in bonds that will automatically convert into shares of its Macau business when the unit is listed on the Hong Kong Stock Exchange.
The casino company is raising the cash as a “stop-gap measure” to avoid defaulting on its U.S. debt, Janet Brashear, an analyst at Sanford C. Bernstein & Co., wrote in a note to clients today.
Las Vegas Sands expects to issue the bonds on Sept. 4, and will pay 9 percent interest, the company said in a regulatory filing today. Las Vegas Sands spokesman Ron Reese, in an interview today, declined to say how the money will be used.
Lenders eased restrictions on Las Vegas Sands’ $3.3 billion Macau credit line last month, including permitting stock and bond sales in Asia in exchange for higher interest rates. Las Vegas Sands said Aug. 20 the Macau unit applied to the Hong Kong Stock Exchange for the IPO, without giving a date for the sale. Conversion of the debt into shares will be mandatory when the stock is sold.
The moves “have clearly helped to strengthen our balance sheet,” Las Vegas Sands President Michael Leven said in a statement today. The company also plans to sell malls and condominiums it has developed in Asia “when economic and capital market conditions are appropriate,” to help pay down debt, according to the statement.
Mothballed Casino
Las Vegas Sands needs cash from the Hong Kong IPO to restart work on mothballed lots at its $12 billion, 20,000-room hotel and casino complex on the Cotai Strip in Macau, the only part of China where casinos are legal. Construction stopped last year when revenue growth slowed and credit markets froze.
Las Vegas Sands, based in Las Vegas, rose 48 cents, or 3.6 percent, to $13.93 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have more than doubled this year.
Goldman Sachs Group Inc. is managing the notes offering, according to Bloomberg data.
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