Las Vegas Sands Corp. (NYSE: LVS) initially showed up on our day trader alerts this morning as one of the Macau casino movers. But right before the open Las Vegas Sands announced that it has reached a deal to raise capital. The casino has priced a public offering of a whopping 181,818,182 shares of common stock, plus 5,196,300 shares of 10% Series A Cumulative Perpetual Preferred Stock, and warrants to purchase an aggregate of approximately 86,605,173 shares of common stock at an exercise price of $6.00 per share.
The offering prices are of course well below the prevailing marketconditions, and that is taking a toll on the stock. The common stock recentlypriced at $5.50 per share. Units consisting of one share of Series Apreferred stock and one warrant to purchase 16.6667 shares of commonstock will be purchased at a public offering price of $100.00 per unit.The shares of Series A preferred stock and warrants are immediatelyseparable and will be issued separately. The Series A preferred stockwill be redeemable on or after November 15, 2011, at the company’soption in whole or in part at a price of $110 per share plus anyaccrued and unpaid dividends.
Goldman Sachs was the sole managing underwriter and book-runner of theoffering and has been given a 30-day option to purchase up to anadditional 18,181,818 shares of common stock to cover over-allotments.
Concurrently with this offering, Las Vegas Sands entered into anagreement with the family of Chairman & CEO Sheldon G. Adelson toissue and sell to the Adelson family 5,250,000 shares of Series Apreferred stock and warrants to purchase an aggregate of approximately87,500,175 shares of common stock at an exercise price of $6.00 pershare. That is under the same terms as those offered in theunderwritten offering. The agreement also requires that the Adelsonfamily agree to convert its 6.5% convertible senior notes due 2013 intoshares of the Company’s common stock at a conversion price equal to thepublic offering price of $5.50 per share for the common stock.
Las Vegas Sands Corp. listed its use of net proceeds as being forgeneral corporate purposes, which may include debt repayment andfinancing of the company’s construction and development projects.
Las Vegas Sands has not officially opened for trading. But there havebeen more than 2 million shares traded and the last print was around$6.65 — if that is accurate on the NYSE. Issuing under-price financingsusually hurt stocks based upon the prior day trading prices. But thereis an issue here which might make this different.
Las Vegas Sands essentially had a going concern note recently becauseof clauses in its debt covenants which could have resulted in all sortsof disastrous outcomes regarding ownership of the casino properties.It looks like the company had to give away a lot at a deep discount,but it also looks like it will get to live to fight another day.
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Jon C. Ogg
November 11, 2008