Aug. 13 (Bloomberg) -- Las Vegas Sands Corp., the casino company controlled by billionaire Sheldon Adelson, got lender approval to extend and repay a portion of a U.S. term loan that had covenants restricting its use of cash.
Credit Suisse Group AG arranged the agreement that will extend part of the company’s $4 billion loan by 2.5 years in exchange for a higher interest rate and debt repayment, according to four people familiar with the matter. The amendment won’t affect the company’s Macau and Singapore borrowings.
The owner of Venetian and Palazzo resorts on the Las Vegas Strip reversed two years of losses this year to report profits in the first two quarters as it benefited from growth in Asia. Las Vegas Sands is seeking to free up cash and reduce debt as its credit agreement starts tightening requirements on the company’s leverage ratio.
“The U.S. operations were more of a concern from leverage and covenant perspectives, anything they do to help that is good,” Keith Foley, a Moody’s Investors Service analyst in New York, said in an interview. “Why are they doing this now? Number one: Because they have to. Number two: Maybe there’s a high level of confidence that they’re not giving away cash they might need for Asian operations.”
Ron Reese, a spokesman for the Las Vegas-based casino operator, didn’t return a message left at his office.
Las Vegas Sands’ sales rose 51 percent to $1.59 billion in the second quarter as the company reported profits, excluding some items, of 17 cents a share, more than the 9-cent average of 18 analysts’ estimates compiled by Bloomberg.
Adelson, founder and chief executive officer of the company, opened the first phase of the $5.5 billion Marina Bay Sands casino resort in Singapore in April. Las Vegas Sands has restarted its mothballed expansion in Macau, the world’s biggest casino center, where total gambling revenue surged 67 percent in the first half.
As of June 30, Las Vegas Sands had 5.5 times net debt to adjusted earnings before interest, taxes, depreciation and amortization, according to the company’s second-quarter report. Its credit agreement capped the leverage ratio at 6 times, which steps down to 5.5 times for the third and fourth quarters of this year, after which it drops to 5 times until maturity, the filing shows. The loan was originally set to mature in May 2014.
Las Vegas Sands will pay 2.75 percentage points more than the London interbank offered rate on the extended loan, said the people familiar with the talks, who declined to be identified because the terms are private.
Prior to the extension, the debt had a margin of 1.75 percentage points over Libor, the rate banks charge to lend to each other. Las Vegas Sands initially proposed a 75 basis-point, or 0.75 percentage point, increase in the spread, said the people. Lenders asked for as much as a 200 basis-point boost with a 1.25 percent floor on the lending benchmark.
The company also will repay $1 billion or 40 percent of the extended amount, whichever is less, the people said. Las Vegas Sands was seeking to extend as much as $3 billion and initially proposed to pay down $750 million of the debt.
Lenders got a 10 basis-point fee for approving the transaction, the people said.
The loan rallied by as much as 1.25 cent to 93.125 cents on the dollar from Aug. 11 through yesterday, according to people familiar with the trades, who declined to be identified because the transactions aren’t public. The debt traded at 92.75 cents today, the people said.
Las Vegas Sands rose 0.33 cent, or 1.16 percent, to $28.69 at 1:37 p.m. in New York Stock Exchange trading.
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