Adelson’s Las Vegas Sands may face default on loans

Bloomberg News

Las Vegas Sands Corp., billionaire Sheldon Adelson’s casino company, said Thursday that it might default on debt and face bankruptcy.

The casino owner, which had $8.8 billion in long-term debt at the end of June, said in a regulatory filing that it probably wouldn’t meet the requirements of loans arranged by Citigroup Inc., Goldman Sachs Group Inc. and Lehman Bros. Holdings Inc. unless it cut spending on developments, boosted earnings at its casinos and raised more capital.

The reversal of fortune is a black eye for Adelson, the company’s chief executive, who was once the third-richest man in the U.S. on the strength of his Las Vegas Sands holdings. The Las Vegas-based company’s dwindling cash flow is threatening $16 billion of developments in Macao, China and Singapore, where Las Vegas Sands is building resorts to cater to wealthy Asian gamblers.


“They need to raise money,” said Keith Foley, a New York-based analyst at Moody’s Investors Service Inc. “It’s getting to the point where they need to do something now.”

Las Vegas Sands doesn’t expect to meet a maximum leverage ratio covenant in the fourth quarter, the filing said. That would trigger defaults that might force it to suspend development projects and “raise a substantial doubt about the company’s ability to continue as a going concern.”

Shares fell $3.81, or 33%, to $7.85, the biggest decline since the company’s initial stock sale in December 2004. The shares had already tumbled 91% this year on worries that falling casino winnings and the global financial meltdown would leave the firm without enough cash.

Spending declines on the Las Vegas Strip and restrictions on visas in Macao have stemmed the flow of cash into Las Vegas Sands.

Thursday’s admission comes after Adelson, who holds a stake of more than 64%, invested an additional $475 million in September to avoid violating the terms of a loan. He also hired an unidentified investment bank to raise more capital with his help.

Las Vegas Sands owns the Venetian and Palazzo casino resorts on the Las Vegas Strip, plus the Macao Venetian, Sands and Four Seasons, and had expected earnings from the properties to fund its expansion and pay its loans.