Las Vegas Sands Gets Extension on Loan to Ease Restrictions on Use of Cash
Credit Suisse Group AG arranged the agreement that will extend a 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 owner of Venetian and Palazzo resorts on the Las Vegas Strip, which reversed two years of losses this year to report profits in the first two quarters, is seeking to free up cash and reduce debt as its credit agreement starts tightening requirements on the company’s leverage ratio.
Ron Reese, a spokesman for the Las Vegas-based casino operator, didn’t immediately respond to a message left at his office outside of standard West Coast business hours.
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. 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.