Las Vegas Sands Corp. (LVS), the casino operator expanding in Macau and Singapore, said its China unit received commitments from banks for $3.5 billion of loans and has the option to raise another $1 billion.
The new credit facilities are expected to “significantly reduce” Sands China Ltd. (1928)’s interest expense and strengthen its financial flexibility, according to a statement to the Hong Kong stock exchange today. They will also help the company extend its debt maturities until 2016, it said.
Macau surpassed Las Vegas as the world’s biggest casino market about six years ago and is the only place in China where casino resorts are legal. Las Vegas Sands reported first-quarter sales and profit last month that rose less than analysts’ estimates on lower winnings from its table games in Nevada.
Sales for the three months to March 31 rose 58 percent to $2.11 billion, reflecting the opening in April 2010 of the company’s $5.5 billion Marina Bay Sands casino resort in Singapore. Analysts had expected sales to be $2.14 billion.
The new credit facilities will consist of a $3 billion five-year term loan and an undrawn $500 million five-year revolving loan, according to the statement. In a revolving loan money that’s been repaid can be borrowed again.
Borrowings under the term and revolving loans are “subject to a pricing grid and, after a six-month period, will have initial pricing set at 2 percent above the London interbank offered rate,” the statement said.
As well as using the proceeds to refinance debt, Sands China will use the money to fund the completion of the construction of two phases of a property along Macau’s Cotai strip, the statement said.
About 14 banks were approached for the loans, a person familiar with the matter said on May 23.