Investors Predict Low Outcome For Sands
Monday marks the highly anticipated debut of Sands China, the Macau division of Las Vegas Sands Corp (LVS: 26.69 0.00%), on the Hong Kong Stock Exchange.
While the IPO raised $2.5 billion, the listing will test the outlook of investors by offering a debt-laden casino company that promises a strong growth in Macau. Sands prospectus shows that as of September 30, Sands China had approximately $4 billion in long term borrowing commitments.
According to a Reuter’s survey of brokers, the gaming company is expected to trade lower than the $10.38HK issue price, which was already in the bottom portion of Sands range of expectation.
Investors have also reported to be leery about a listing that will use its proceeds to finance other casino projects as well as pay down debt and shareholders’ loans.
Las Vegas Sands has committed to using proceeds to restart construction on their Macau project in January. Another major resort project for the company is Marina Bay Sands in Singapore, projected to cost $5.5 billion and is scheduled to open in 2010.
Sands was the first U.S. based casino operator to develop in Macau in 2004 when the Chinese government opened the gambling market to outsiders. However they are the second to enter the Hong Kong Stock exchange following two months behind Wynn Resort.
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