Sands uncertain about Singapore's performance

Not being the one to open the first casino in Singapore seemingly does not do really bad for Las Vegas Sands (LVS). While Marina Bay Sands is scheduled to open on April 27, the company is going to observe Genting Singapore's Resorts World Sentosa for a month before giving its board a fiscal plan.
LVS president and chief operating officer Michael Leven told the Reuters Travel and Leisure Summit: "We are not disappointed in what we're seeing in Genting, but it's too early to assess".
It was reported that Leven said LVS will need to generate at least US$400 million in EBITDA from Marina Bay Sands in a bid to meet debt covenants.
CEO Sheldon Adelson has disclosed earlier that he expected the casino resort could make an annual profit of US$1 billion.
"We're accumulating cash ... the only risk is if Singapore doesn't do well," Leven said.
"We have to do $400 million in EBITDA to clear covenants. If we don't do that, we've made a bad investment in Singapore."
Bloomberg reported Wednesday that Leven said in an interview in New York the company will seek to refinance about US$5 billion of US loans this year after opening the casino resort in Singapore.
He said LVS plans to renegotiate with lenders to amend and extend loans before the end of this year.
The company may offer to repay a portion of the debt, pay fees and negotiate a new interest rate in exchange for the modifications. There were about 130 lenders in the company’s original loan group, Leven told Bloomberg.
Chief Financial Officer Kenneth Kay said on a conference call last week LVS had US$11 billion in long term debt as of December 31, 2009, with an average weighted interest rate of four percent.
"If Singapore opens well, our leverage gets much better," Leven said according to Bloomberg. "Our interest rate carries pretty low at this time in both Macau and in the US, so there’s no rush to do it."
In addition, Leven told Reuters he did not believe the tremendous growth in Macau's gaming revenue is sustainable, adding that LVS agrees with the Chinese government's target for a 10 to 12 percent annual growth.
"You don't want bubbles. I think they'd try to moderate it in some way although I don't know how," he said.
The LVS president and COO also said he would not expect China's tighter monetary policy to have a big impact on the Macau operations, noting the market size and the customers preference for "using cash, not credit, to gamble", according to Reuters.
LVS expects to begin selling condominiums at its Macau Four Seasons property through a co-op structure, which will bring in north of US$1 billion, Leven said.
He said Macau currently accounts for about 70 percent of Las Vegas Sands' earnings, but that will drop to around 50 percent once Marina Bay Sands is fully up and running. Las Vegas will account for just 10 to 15 percent of earnings.
On the other hand, MGM Mirage asked lenders to agree to extend most of its US$5.55 billion of senior credit facilities in exchange for a higher interest rate, fees and repayment of part of the debt, Bloomberg reported.
Wynn Resorts Ltd in September also amended a credit agreement allowing it to sell bonds and repay loans.
Harrah’s Entertainment Inc., the world’s biggest casino company, reduced its debt by US$4.2 billion and extended some maturities through a series of exchange offers and other refinancing activity last year, according to Bloomberg.