Sands China begins Hong Kong IPO today

Journalists watch a promotional video about Sands China Ltd. investments in Macau, showing chairman of Las Vegas Sands Corp Sheldon Adelson (R-video screen) and his wife Miriam during a video link between Hong Kong and Las Vegas announcing the details of

Las Vegas Sands (LVS) Corp. is looking to grow its market share in Macau above 30 percent when it completes the two stalled projects on the Cotai Strip in mid-2011, an executive said according to Reuters.
In addition, the Hong Kong public offer of Sands China, the Macau unit of LVS, will commence at 9am today and close at 12 noon on November 19. The company is set to raise HK$26 billion in the listing of its Macau assets in order to restart the Parcels 5 & 6 projects in Cotai and also pay off some of its high debt load.
In a video conference conducted in Hong Kong yesterday, Chief Executive Officer of Sands China Steven Jacobs said that LVS expected core profits from its Macau operations to grow by 15 percent to $803 million in 2009, from $696 million last year.
Jacobs also said that Sands aimed to increase its market share, currently from 22 to 24 percent, to “upwards of 30 percent” in Macau after completing the stalled construction on the Cotai Strip.
He added that Sands China could resume building the 13.3 million square foot resort as early as January 2010, and was expected to open the first phase of the projects in June 2011.
The company has also recently secured commitments of US$1.45 billion in project financing for Macau.
According to Michael Leven, LVS president and special advisor to Sands China, Sands China will hire as many as 13,000 workers to finish the construction.
The projects, including casinos and Shangri-La, Sheraton and Traders hotels, were suspended late last year as the company grappled with a liquidity shortage, brought on by the global financial crisis and LVS’ massive debt load.
A total of 1.87 billion shares will be offered in the global offering, including initially 187 million shares at a price ranging from HK$10.38 to HK$13.88 per share for the Hong Kong public offer.
Jacobs said investor reaction to its Hong Kong IPO, the city’s second largest this year, had been extremely favourable.
The final offer price of the shares is expected to be determined on November 21.
Trading in the shares is scheduled to commence on the main board of the Hong Kong Stock Exchange on November 30. Each trading consists of 400 shares.
Assuming that the share price is HK$12.13 (mid-point of the offer price range) the net proceeds of the global offering will be around HK$14.715 billion, after deducting underwriting commissions and estimated expenses payable by the company in connection with the initial public offering.
In a Sands China’s statement yesterday, the company expected that around HK$6,347.3 million of the net proceeds will be used to repay all of the shareholders’ loans and intercompany payables outstanding immediately prior to the completion of the global offering .
In addition, approximately HK$3.875 billion will be used in conjunction with project financing to complete construction of the integrated resort on Parcels 5 & 6 in the Cotai Strip’s development.
As well, HK$2.325 billion will be used to repay a portion of Sand China’s Macau credit facility, and HK$775 million will be used for general corporate purposes.
The remainder of around HK$1,392.8 million will be used, subject to the then current economic conditions and based upon the directors’ preferences, either for financing the completion of the two parcel construction or an incremental repayment of a portion of the Macau credit facility.
Jacob said after the Hong Kong IPO the firm expected to achieve a ratio of debt to adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of 2.2 to 2.3, down from 2.86 at present, falling to 1.8 in 2011 and below 1 in 2012, Reuters reported.
If LVS’ IPO is successful it would join Wynn Resorts, which listed its Macau unit in October and raised $1.87 billion.