July 2 (Bloomberg) -- Las Vegas Sands Corp., the world's largest casino company by market value, may borrow about $7 billion to expand and refinance debt for projects in Macau, according to three people familiar with the deal.

The company is in talks with lenders for the deal, which would be its biggest outstanding loan, to help fund new casinos and hotels in the former Portuguese colony, said the people, who declined to be identified because the information isn't public. It may also replace $3.3 billion of loans taken in 2006 to finance its Venetian casino resort in the city, the people said.

The loan will help Las Vegas Sands fund $12 billion in spending on a 20,000-room hotel and casino complex in Macau, the place that overtook the Las Vegas Strip in 2006 as the world's biggest gambling hub. Las Vegas Sands shares fell to the lowest in 2 1/2 years and have shed more than half their value in 2008.

``Demand for gaming in Macau is still growing fairly well, but supply is an issue,'' said Gabriel Chan, an analyst at Credit Suisse Group in Hong Kong. ``The growth of supply is just outrageous. This, together with rising labor costs and inflation, will put further pressure on every casino operator in the next couple of years.''

Macau, the only region in China where gambling is legal, has also drawn investors including Wynn Resorts Ltd. and MGM Mirage. Credit Suisse expects the supply of gaming tables in Macau to increase by 30 percent next year, outpacing the 20 percent expansion the Swiss bank forecast for demand, Chan said.

Las Vegas Sands dropped $2.43, or 5.4 percent, to $42.44 by 4:05 p.m. in New York Stock Exchange trading, the lowest price since January 2006. The shares have plunged 59 percent this year.

``The company does not comment on rumor or speculation,'' Las Vegas Sands' spokesman Ron Reese said today in a telephone interview. If Las Vegas Sands has anything to report, it will file the information with the Securities and Exchange Commission, he said.

Macau Gaming Revenue

Macau gaming revenue jumped 46 percent last year to 83.8 billion patacas ($10.4 billion). That may expand 29 percent in 2008, according to Las Vegas-based gaming research firm Globalysis Ltd. More than half of 23 analysts and casino executives surveyed by the American Gaming Association said the Chinese city will probably maintain its revenue growth for at least three years.

Las Vegas Strip casino revenue fell for the fourth straight month in April, the Nevada Gaming Control Board said last month. Consumers have limited spending amid the worst U.S. housing slump since the Great Depression, mounting unemployment and higher costs for food and gasoline.

Casinos in Las Vegas will lose more visitors and revenue because airlines are cutting flights to the city and increasing ticket prices to save on fuel costs, Moody's Investors Service said June 11.

Las Vegas Strip

Investors may be underestimating the ``magnitude and duration'' of problems facing Las Vegas Strip casinos, Joseph Greff, an analyst at JP Morgan Securities Inc., said June 26.

Greff cut his estimates for Las Vegas Sands and MGM Mirage, forecasting ``lackluster'' spending and ``stunted visitation.'' Airline cuts will hurt convention business, and companies will discount rooms to fill new hotels, he said in a note.

Las Vegas Sands is paying interest 2.75 percentage points above the London interbank offered rate for the $1.2 billion seven-year portion of the 2006 loans, data compiled by Bloomberg show. Citigroup Inc., Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. arranged the loans.

Las Vegas Sands' long-term debt is rated BB-, three levels below investment grade, by Standard & Poor's and a comparable Ba3 by Moody's Investors Service.

Default Swaps Rise

Five-year credit-default swaps on Las Vegas Sands reached a record high at 595 basis points today, according to CMA Datavision. That means it costs $595,000 a year to protect $10 million of the company's debt from default for five years.

Las Vegas Sands is also building the S$5 billion Marina Bay Sands in Singapore, scheduled to open as the city state's first casino in 2009, and the $800 million Sands Bethworks in Bethlehem, Pennsylvania.

Costs for new properties led to an unexpected first-quarter loss for Las Vegas Sands, majority-owned by billionaire Sheldon Adelson. The Las Vegas-based company had $11.2 million of losses in the first quarter, after interest expenses more than tripled to $114.7 million.

To contact the reporter for this story: Patricia Kuo in Hong Kong at pkuo2@bloomberg.net.

Last Updated: July 2, 2008 17:16 EDT