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Is LV Sands headed for bankruptcy?

Last edit: Atltrainman on Saturday, 11th October 2008 9:12 pm
Last response by Chuckmonster 6th November 12:35pm

Is the LV Sands company headed for bankruptcy? Let's look at the recent developments:

On Oct 1st, Sheldon Adelson loaned the company $475 million dollars to help meet liquidity requirements of a $5 Billion dollar loan.

In May LV Sands lost a judgement for $58.6 million to Richard Suen over his assistance in 2002 with LV Sands getting a Macau gaming license. When LV Sands filed an SEC report and said it didn't set money aside to pay the judgement. Suen recently filed for a court order to have LV Sands post a bond on the award, while the case is in appeal, because the current economic meltdown has affected the company's fiscal stability. (http://www.lvrj.com/business/30835674.html)

LV Sands stock has gone from a high of $148.76 per share last October to a close last Friday of $14.05 per share. (http://tools.morningstar.com/charts/Mcharts.aspx?Country=USA&Security=LVS&ExchangeId=NYSE&sLevel=A) And Return on Equity has gone from a high of 67% in 2004 to only 5.38% in 2007 and the TTM for 2008 is showing a -1.27%.

The Venetian, LV Sand's flagship hotel, is having to resort to a promotion offering their suites for $119/night with a $50 gaming credit (http://capps.zt03.net/custapps/vene1/aoofh/web.php?md=3200474&ed=141402471&ord=141402471&em=friesster@aol.com&b=237)

So what does the future hold for LV Sands? Can bankruptcy be far off? Will LV Sands have to look for a merger partner with deep pockets in order to weather the current economic storm?

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 Atltrainman replied on Saturday, 11th October 2008

So you think LV Sands can weather the storm as they are? Even with their Macau ventures being hit hard by the Chinese government regulations limiting access to Macau? Even with their stock down over 82% in the last year? Even with their casinos looking like a ghost town (per visitor trip reports at various other sites)?

They may survive if they continue to drop hotel rates at the Venetian and Palazzo and break the $100/night barrier. They will have to find a way to bring people into their casino and make them feel that they are getting fair value of play time versus house take on the slots. Right now, ask almost any player and they will tell you they fell that the machines at LV Sands casinos in Vegas are super tight.

I will be in Vegas in less than 4 weeks and I will walk through the Venetian and Palazzo and see for myself how empty the places are. I expect the place to be near dead.

 Chuckmonster responded on Sunday, 12th October 2008

A lot more dominoes need to fall before you can even begin to talk LVS bankruptcy.

The Suen suit is going to be appealed and litigated for at least another year, maybe more. Even so, $58m bucks isn't an earth shattering amount of money for LVS to write down (against earnings, for a tax boon) if and when they decide to pay up.

Cotai: Phase II projects on hotel row (St. Regis, Sheraton, Shangri La, Traders) have hotel partner investors + arranged funding. Phase III (Fairmont, Raffles, Hilton, Conrad) is indefinitely on hold until the Macau government signs the paper work (they're slow as fuck with bureaucracy). LVS recently (April) hosted an investor conference to raise capital for this and other future projects. Phase IV (Intercontinental, Tang etc) is owned by Far East Consortium and will be contract operated by LVS. Phase III and IV are currently staging areas for Phase II and the Four Seasons hotel & residences construction... theoretically, they haven't broken ground.

Jeff Simpson stated on the latest VegasGang that the loan from Adelson was expected by many gaming analysts and investors. For more details, listen to the discussion there.

Re visitation/revpar/trip reports, Vegas is getting pounded right now, no surprise there. But what LVS has to its advantage is MICE bookings. Palazzo added room inventory to the mix at the beginning of the downturn. Simply put, Palazzo is cannibalizing Venetian. It's no surprise that they are discounting 'lower end rooms' at Venetian (Venezia as well) to maximize REVPAR and prove shareholder ROI for the Palazzo. They have been making concerted efforts to push MICE customers to the higher price point rooms at Palazzo. I'd also guess that most tourists who can afford Venetian/Palazzo's mid-high tier price point would rather stay at the spiffy new joint as well. Additionally, LVS (and Wynn and top tier MGM properties) have a significant chunk of Asian/International clientele. They own two 747s, which would come in handy if they can't get their whales into Macau.

LVS would have to announce the suspension of construction on the Marina Bay Sands project in Singapore, Cotai phase II & III & IV, the new Sands Expo, the SandsBethWorks casino in Pennsylvania (or something else equally dramatic) THEN exhaust all other financing options before it will head towards filing bankruptcy.

The problem is that there aren't many folks out there that have liquidity to invest and/or takeover LVS. I'd peg MGM as a much better takeover target than LVS right now.

 dpo1013 responded on Wednesday, 22nd October 2008

.....And from beyond, I hear the remorseless chuckles of Frank Sinatra, for anyone to have the gall and disrespect to implode the Sands and rebuild on hallowed ground of early Las Vegas.

The same way I have no concern for Boyd Gaming and Elad- and their current problems replacing the Stardust and Frontier.

 donnymac66 replied on Wednesday, 22nd October 2008

Do you feel the same way about Wynn, Belagio and Planet Hollywood? (Elvis got married at the freakin Aladdin)

 bcn3878 responded on Sunday, 26th October 2008

No chance, Sheldon is worth more $$$ than LVS. He built his empire literally from nothing and was a forbes pick for top 100. The Adelon family are faced with a difficult but not impossible task of raising a few billion $$ in a not so friendly economy, but it is not impossible. He started with a small loan 50 years ago and look at him now. This is the time when smart investors become millionares. LVS will bounce back, as well as Wynn, MGM and the like. We just need to be patient.
Jay, Boston MA

 Chuckmonster responded on Thursday, 6th November 2008

I guess this thread deserves an update... some of the dominoes have fallen and it's becoming more of a possibility every day:

The Sands Bethworks has put hold on non-casino construction
Marina Bay Sands was buttressed by local govt tourism planners
Venetian Macao has put the Grand Canal Shops up for sale
Four Seasons Macao can't sell their condos as they has planned due to govt zoning issues
Sheldon Adelson's family has re arranged their finances, for bail bucketing


The latest : LVS warned that they might default on some loans.
http://www.lvrj.com/news/breaking_news/34037829.html