LVS says it won't seek large loan for Marina Bay Sands expansion project
Las Vegas Sands (NYSE: LVS ) is seeking a loan of up to $7.5 billion to fund improvements and expansion of Marina Bay Sands in Singapore, reports said Thursday. However, the bookmaker denied it was seeking funds.
In local currency terms, a loan of this size would amount to S$10 billion at current exchange rates. It would be the largest syndicated financing in the city-state’s history, but LVS won’t surpass that record.
We are not entering the market or seeking a $10 billion loan," Ron Reese, senior vice president of global communications for Las Vegas Sands, said in a statement to Bloomberg.
Unidentified sources speculated that LVS may extend its revolving credit line, refinance existing debt and issue new corporate bonds to fund the expansion of Singapore's integrated resorts. It is assumed that loans in Singapore will be priced in US dollars, but even in this case borrowers will incur higher financing costs.
Like the United States, interest rates in Singapore have risen sharply recently. Measured by Singapore's three-month average overnight rate, the benchmark for Singapore loan pricing, interest rates in the city-state are currently around 3.5%, compared with around 0.50% at the start of 2022.
LVS admits MBS expansion costs are rising
While the company may not be in the market for new capital, Sands acknowledged that costs associated with Marina Bay Sands' expansion are soaring.
LVS said in an October filing with the U.S. Securities and Exchange Commission: "As a result of inflation, rising material and labor costs, and other factors, the company expects the total cost of the project to be materially greater than it had estimated as of April 2019 based on current market conditions. amount.” SEC filing).
Initially, the MBS expansion, which includes new guest rooms, conference rooms and a 15,000-seat entertainment venue, was expected to cost S$4.5 billion (US$3.37 billion). It seems that this value is clearly exceeded.
Nonetheless, Sands' investment in MBS should pay off in the long run. The venue is one of only two integrated resorts in Singapore and one of the most profitable casino hotels in the world, attracting visitors from across Asia.
Sands has the right to withhold the loan
While MBS, one of the crown jewels of the Asia-Pacific gaming community, needs improvements to keep pace in an increasingly competitive environment, Sands has wisely minimized the risks of the new loan.
Standard & Poor's (S&P) restored the company's investment-grade credit rating in July, but it was only a one-notch upgrade, and larger new borrowings could pose a headwind for further upgrades.
Additionally, interest rates are rising globally, suggesting that few jurisdictions are able to obtain favorable terms for Sands seeking to borrow.
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Source: www.casino.org
