TSL Express Daily News
The Secured Lender
SFNet's 80th Annual Convention Issue
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October 24, 2024
Source: Investing
Las Vegas Sands Corp. (NYSE:LVS) has entered into a new credit agreement and terminated an existing one, as per a recent 8-K filing with the U.S. Securities and Exchange Commission.
On Wednesday, Sands China (OTC:SCHYY) Ltd., a subsidiary of the Las Vegas-based corporation, secured a 19.50 billion Hong Kong dollars (approximately $2.51 billion) unsecured revolving credit facility and a HKD 12.95 billion (about $1.67 billion) unsecured term loan facility.
The new revolving credit facility, denominated in Hong Kong dollars, is set to support general corporate and working capital needs of Sands China and its subsidiaries until September 24, 2029. The term loan facility, also in Hong Kong dollars, is available until August 31, 2025, and is intended for repaying amounts due under its 5.125% Senior Notes maturing in August 2025.
Interest rates for the revolving facility will be based on the Hong Kong interbank offered rate plus a margin tied to the consolidated leverage ratio, starting at 2.50% per annum. The term loan facility carries a margin of 1.65% per annum. Additionally, Sands China will pay a commitment fee of 0.60% per annum on undrawn amounts and other customary fees.
The agreement includes customary covenants for unsecured financings, such as limitations on liens, sale and leaseback transactions, dividend restrictions, and conditions for the repayment of the $1.0 billion subordinated unsecured term loan provided by Las Vegas Sands Corp. to Sands China. The covenants also require Sands China to maintain certain financial ratios.
In conjunction with the new credit agreement, the company's previous credit facility from 2018 has been terminated. The new facility also outlines standard events of default, including provisions related to the gaming operations of Sands China and its subsidiaries and the status of certain land concession contracts.
JPMorgan also raised its price target to $60, citing optimism around the renovations at the company's Macau properties. However, CFRA downgraded the company's shares from Buy to Hold, adjusting the price target to $51 due to concerns about Las Vegas Sands' reliance on the Macao and Asia markets.
Las Vegas Sands' second-quarter results did not meet expectations due to disruptions from renovations in Macau and Singapore. Despite this, Macquarie maintained an Outperform rating on the company, seeing long-term benefits from the renovations.
The company also reported a 24% increase in total gaming revenues in its Macau operations and is exploring new development opportunities in markets such as New York, Texas, and Thailand.
InvestingPro Insights
Las Vegas Sands Corp.'s recent credit agreement aligns with its strong financial position, as reflected in InvestingPro data. The company's impressive gross profit margin of 76.91% for the last twelve months as of Q2 2024 suggests efficient cost management, which could be further bolstered by the new credit facilities. This efficiency is also evident in the company's robust EBITDA growth of 137.26% over the same period.
InvestingPro Tips highlight that LVS operates with a moderate level of debt and that its liquid assets exceed short-term obligations. These factors likely contributed to the company's ability to secure favorable terms in its new credit agreement. The tip noting that analysts predict the company will be profitable this year aligns with the purpose of the new facilities, which are intended to support general corporate needs and debt refinancing.