Vegas Sands Seeks Mixed Shelving, May Sell Bonds
Las Vegas Sands (NYSE: LVS), the biggest casino operator in terms of market value, recently submitted a form S-3 to the Securities and Exchange Commission (SEC), indicating it may be preparing to sell corporate securities.
This filing allows companies to declare so-called mixed-shelf offerings, which encompass a range of securities, such as common stock, corporate bonds, depositary shares, warrants, and more.
While Las Vegas Sands hasn't stated definitively which type of securities they intend to sell, a closer look reveals they're unlikely to be selling preferred stock. And if they were to sell common stock, it would likely devalue existing shares, potentially resulting in a negative reaction for a share that's up just 1.60% year-on-year.
There's also a chance they might be preparing to sell some kind of corporate debt, but this is not certain, given the current high-interest rate environment.
The filing does not explicitly disclose the type of securities to be issued. However, the company has around $5.57 billion in cash readily available, giving it one of the strongest cash reserves in the gaming industry. Additionally, they have access to a $4.17 billion revolving credit facility. Their total debt amounted to $14.17 billion as of September 30.
Potential Uses of Raised Capital
The filing suggests that the company plans to use the funds raised from the sale of these securities for general corporate purposes. These could include future construction and development projects, working capital additions, capital expenditures, repayment of debt, possible acquisitions or investments, or stock repurchases.
In its most recent quarterly earnings report, Sands announced a doubling of its share repurchase program to $2 billion. This plan extends until November 3, 2025.
As mentioned in the document, the company could sell discounted bonds, known as original issue discount securities. However, they clarified that unless they specify otherwise in a prospectus supplement, they may issue additional debt securities of a particular series without the approval of the holders of those series or any other series outstanding at the time of issuance.
Acquisitions Unlikely
Though acquisitions are mentioned as a potential use for the funds, it's doubtful they'll go down this route. Sands has stayed away from internet gaming and online sports betting, and there aren't any apparent rumors suggesting mainland China's Macau casino resorts are for sale.
Additionally, since authorities in Singapore are unlikely to approve Las Vegas Sands controlling both integrated resorts in that city-state, and considering Macau and Singapore are their only current markets, large acquisitions don't seem likely.
Ultimately, it remains speculative, but the operator could potentially use some of the money they raise through the offering to fund their bid for a New York City-area casino.
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Source: www.casino.org
