GGRAsia – LVS amends US$1.5bln loan facility, dividends restricted

LVS amends US$1.5bln loan facility, dividends restricted

Feb 01, 2023 Newsdesk Latest News, Top of the deck, World

International casino operator Las Vegas Sands Corp says it has amended with banking partners certain term loans regarding a US$1.50-billion revolving credit agreement. As part of the amendment, the casino group faces limitations regarding the payment of dividends until the end of 2023.

Las Vegas Sands is the parent of Macau casino operator, Sands China Ltd, and also runs the Marina Bay Sands casino resort in Singapore.

According to a Tuesday filing, the parties agreed to extend “to December 31, 2023,” the period during which Las Vegas Sands “is unable to declare or pay any dividend or other distribution, unless liquidity is greater than US$1.0 billion on a pro forma basis after giving effect to such dividend or distribution”.

The parties also agreed to extend until December 31, 2023, the period during which the casino firm is required to maintain a certain minimum liquidity, namely US$700 million, as of the last day of each month.

In late January, Patrick Dumont, Las Vegas Sands president and chief operating officer, said that as the company saw “normalisation of cash flows,” it would “look to start the dividend again and be very shareholder friendly”. His comments were made in a conference call with investment analysts following the firm’s announcement of its fourth-quarter results.

Mr Dumont had also said Las Vegas Sands was “very focused on the strength” of its balance sheet for new developments, referring to the opportunity for a casino licence in downstate New York, in the United States.

“I think we’ll continue to deploy capital where the highest returns are. And as part of that, the dividend will be fundamental to our shareholder return strategy,” he added. “But I think we’re going to wait and see where operating cash flow ends up and we’ll make some assessments at that point.”

S&P Global Ratings Inc stated in early January it expected Las Vegas Sands to “prioritise restoring credit measures before resuming any level of dividends”.

“The company took steps early on in the pandemic to preserve its strong liquidity and protect its balance sheet,” stated the ratings agency, including suspending its quarterly dividend programme in the U.S. and in Macau.

“We believe Las Vegas Sands will be prudent in its decision to restart its U.S. parent dividend programme and that Sands China’s approach to its resumption of dividends will be similar,” the institution added. “We do not expect it to resume paying dividends until its cash flow is recovering and it has clear visibility around the sustainability of that recovery.”

S&P said it did not expect the company to “restart dividends before 2024”.

It added: “Prior to resuming dividends, we believe the company will focus on significantly reducing leverage and rebuilding its sizeable cash balances, especially in Macau, which were somewhat depleted as a result of the pandemic.”

The ratings agency also said it believed that Las Vegas Sands would “focus investments primarily on finishing the renovation of its hotel rooms in Singapore and beginning its Singapore expansion.”

Marina Bay Sands has embarked on a US$1-billion refurbishment of accommodation at the property, to add more suites to the existing hotel towers. The hotel renovation project is separate from the pledge to spend SGD4.5 billion (US$3.3 billion) on expansion of the property, which includes a new hotel tower, an entertainment arena and additional casino space.