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01 Feb 2005
MOODY'S ASSIGNS B2 TO LAS VEGAS SANDS CORP.'S $250 MIL. SR. UNSEC. NOTES; POSITIVE RATINGS OUTLOOK
New York, February 01, 2005 -- Moody's Investors Service assigned a B2 rating to Las Vegas Sands Corp.'s
(NYSE:LVS) proposed $250 million senior unsecured notes due
2015. Moody's also assigned a B1 senior implied rating,
B3 long-term issuer rating, positive ratings outlook,
and SGL-3 speculative grade liquidity rating. Las Vegas
Sands Corp. is a holding company that owns 100% of Las Vegas
Sands, Inc. Las Vegas Sands Corp. completed an initial
public offering of its common stock in December 2004.
Moody's also assigned a B1 rating to Las Vegas Sands, Inc.'s
and Venetian Casino Resorts, LLC's (Restricted Group) proposed
$400 million senior secured term loan B add-on and $275
million senior secured revolving credit facility availability add-on.
Existing Restricted Group ratings were confirmed. Once the transaction
closes, the Restricted Group's B1 senior implied, B3
long-term issuer, and speculative grade liquidity ratings
will be withdrawn. Although these ratings will be located at the
highest rated entity (once the new transactions close), Moody's
ratings and analysis will continue to reflect the credit profile and financing
structure of the Restricted Group.
The ratings reflect the Restricted Group's continued operating and
financial improvements, favorable outlook for the Las Vegas Strip,
successful expansion efforts to date, and good risk/reward profile
of the $1.6 billion Palazzo Casino Resort (Phase II) development
which should further enhance the competitive position and overall asset
quality of the company. The ratings also reflect the popularity
and quality of Venetian's casino property and the position of Las Vegas
as one of the largest entertainment markets and trade show destinations
in the U.S.
The positive outlook considers the recent redemption of almost $300
million of the Restricted Group's 11% second priority mortgage
notes due 2011 (using the proceeds of the recent initial public offering),
as well as the lower financing costs that will likely result from the
proposed transactions. The proposed transactions are designed to
replace the remaining $844 million of 11% second priority
mortgage notes due 2011 with lower cost debt. The positive outlook
also incorporates Moody's expectation that the company's Macau
casino development will be self-financing and, as a result,
will not absorb Restricted Group cash flow. The positive rating
outlook does not anticipate a major acquisition and/or significant expansion
activity by the Restricted Group other than those currently being pursued.
A ratings upgrade is possible within the next 12-18 month period
to the extent operating results continue to improve and Restricted Group
debt/EBITDA (including holding company debt guaranteed by the Restricted
Group) approaches a range of between 4.0 to 4.5 times.(x).
Restricted Group debt/EBITDA at the end of fiscal year 2004 was about
The SGL-3 reflects the Restricted Group's considerable reliance
on its bank facility over the next 12-18 months. Proceeds
from the proposed bank facility and entire senior unsecured note offering
will be used to repurchase or redeem the Restricted Group's outstanding
11% mortgage notes due 2011 and pay financing fees and expenses.
The bank facility will also be used to finance a portion of the design,
development and pre-opening costs of the Palazzo Casino Resort
that is currently scheduled to open in the first quarter of 2007.
In addition to using debt to finance a portion of the Palazzo project,
the company also has available to it a portion of the proceeds from the
May 2004 sale of the Grand Canal Shoppes that raised $766 million
in gross proceeds.
The upsized senior secured bank facility will be comprised of a $400
million 5-year senior secured revolver, a $1.065
billion 6-year senior secured tranche B funded term loan,
and a $105 million senior secured delayed draw tranche B term loan.
Although the new senior unsecured notes will be issued by Las Vegas Sands
Corp., a holding company outside of the Restricted Group
structure, they will be jointly and severally guaranteed on senior
unsecured basis by the same existing and future domestic subsidiaries
that guarantee the Restricted Group's senior secured bank debt.
The Restricted Group's upsized bank agreement will include a provision
that allows the Restricted Group to make debt service payments towards
Las Vegas Sands Corp.'s new senior unsecured notes without
being limited by a restricted payments covenant.
The following new ratings were assigned to Las Vegas Sands Corp.:
- $250 million senior unsecured notes due 2015 -- B2;
- Senior implied rating -- B1;
- Long-term issuer rating -- B3;
- Speculative grade liquidity rating -- SGL-3;
- Positive rating outlook.
The following new ratings were assigned to the Restricted Group:
- $400 million senior secured term loan B due 2011 add-on
-- B1; and
- $275 million senior secured revolving credit facility
due 2010 add-on -- B1.
The following existing ratings for the Restricted Group were confirmed:
- $105 million senior secured delayed draw term loan B due
2011, at B1;
- $125 million senior secured revolver due 2009, at
- $665 million senior secured term B loan due 2011,
The following existing ratings for the Restricted Group were confirmed,
and will be withdrawn once the new senior unsecured notes and upsized
bank facility become effective:
- Senior implied rating, at B1;
- Long-term issuer rating, at B3;
- Speculative grade liquidity rating, at SGL-3;
- $115 million senior secured delayed draw term loan A due
2009, at B1; and
- $844 million 11% second priority mortgage notes
due 2010, at B2.
Las Vegas Sands Corp., headquartered in Las Vegas,
Nevada, owns The Venetian Resort Hotel Casino and the Sands Expo
and Convention Center in Las Vegas, and the Sands Macao in the People's
Republic of China Special Administrative Region of Macao. The company
also is developing additional casino hotel resort properties in Macao,
including the Macao Venetian Casino Resort.
Corporate Finance Group
Moody's Investors Service
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
No Related Data.
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