Las Vegas Sands Corporation Plans to Sell Bonds for Debt Refinancing, Potentially Repurchasing Company Shares
Posted: April 30, 2025, 4:16am.
Last updated: April 30, 2025, 4:16am.
@etfgodfather (@Todd Shriber) Financial | Gaming Business| Mergers and Acquisitions Las Vegas Sands Refinances $500M Debt, Eyeing Potential Stock Buybacks* Refinances $500M of maturing debt in June** Portion of proceeds could be used for share repurchases* Offering not officially priced as of yet
suspect the tournament on Sunday, gaming bigwig Las Vegas Sands (NYSE: LVS) filed a prospectus with the Securities and Exchange Commission (SEC) outlining intentions to sell senior corporate notes and refinance $500 million of debt maturing in June.
The prospectus, however, shies away from mentioning pricing and interest rate specifics. Nonetheless, it's anticipated that a portion of these funds could be directed towards settling the impending $500 million worth of 2.90% senior unsecured bonds due in June. Furthermore, a chunk of the proceeds could potentially finance share buybacks.
"We intend to use the net proceeds from this offering, together with cash on hand, to (i) redeem in full the outstanding $500 million 2.900% Senior Notes due June 2025 (as defined herein) and any accrued interest, (ii) pay transaction-related fees and expenses and (iii) for general corporate purposes, which may include repurchases of LVSC’s common stock under the existing authorization by LVSC’s board of directors," the prospectus elaborates.
Upon announcing first-quarter results a week prior, the company shared with investors that the board had authorised an expansion of the previously established share reacquisition program from the remaining $1.1 billion to a substantial $2 billion.
Sands' Balance Sheet Stands Firm, According to Fitch
It's not entirely uncommon for enterprises, even in the gaming industry, to float new bonds, refinancing or retiring mature debt obligations. Doing so can offer a cost-effective means for issuers to elongate their maturity profiles while potentially trimming interest costs.
As far as Sands is concerned, the upcoming bond issue appears unlikely to put significant strain on its balance sheet. Supporting this notion, Fitch Ratings shares that Sands had earnings before interest, taxes, depreciation, and amortization (EBITDA) leverage of 3.4x at year-end 2024—a number that, if maintained or improved, could trigger a credit upgrade.
"Fitch believes LVSC is dedicated to managing its balance sheet to preserve investment-grade ratings. The company boasts a solid record of clearly communicating its leverage policy and exercising prudent balance sheet management. Management has consistently aimed for a gross debt ratio of 2.0x-3.0x before project development impacts," Fitch confirms.
Fitch Ratings awarded the note sale a rating of "BBB-," labeling it with a "stable" outlook. The agency also highlighted the gaming company's cash flow capacity to cover its shareholder reward plans.
Sands' Credit Profile Shines Against Rivals
The overall credit score assigned to Las Vegas Sands clocks in at "BBB-," a standing favorable to fellow gaming players such as MGM Resorts International (NYSE: MGM) and Wynn Resorts (NASDAQ: WYNN), which both sport Fitch's "BB-" (junk grade) ratings.
In the wake of the COVID-19 pandemic, Fitch applauded Sands for exercising caution in the management of its balance sheet, temporarily suspending its dividends.
"Positively, the company made prudent moves to manage its balance sheet during the ongoing operating distress caused by the pandemic. This included pausing shareholder returns as operating cash flow waned and a public commitment not to restart them until cash flows stabilized at a level commensurate with growth," Fitch concludes.
Enrichment Data:
Overall:
The refinancing exercise by Las Vegas Sands (LVS) revolves around the selling of senior corporate notes to retire $500 million of 2.90% senior unsecured bonds maturing in June, with potential funds also set aside for stock buybacks. Key points to note are:
Debt Management Strategy
- Refinancing existing debt: The proceeds from this offering will primarily be used for strategic redeeming of the $500 million bond obligation due in June, alleviating any liquidity concerns that might arise.
- Balance sheet context: As of March 31, 2025, the total debt stands at $13.71 billion (disregarding finance leases), with $3.04 billion in unrestricted cash and $4.44 billion available in credit facilities. Subsidiaries hold $9.75 billion in long-term debt, net of discounts.
- Covenant risks: Pre-existing credit agreements with Macao, Singapore, and U.S. lenders include financial covenants which might limit borrowing or asset sales in the future.
Shareholder Returns
- Accelerated buybacks: In Q1 2025, LVS repurchased $450 million of stock (10 million shares).
- Expanded repurchase program: With the increased authorization from the board on April 22, 2025, the buyback program now stands at $2.0 billion.
- Dividend consistency: A quarterly dividend of $0.25 per share is still being maintained, with the upcoming payment scheduled for May 14, 2025.
Credit Rating Considerations
While rating changes have yet to be officially reported, factors to consider include:- Leverage pressures: The addition of debt to the books via the offering could potentially exert pressure on coverage ratios, provided earnings growth does not offset it.- Liquidity buffer: The current $3.04 billion cash balance, combined with unused credit facilities ($4.44 billion), offers short-term stability.- Regulatory risks: Macao and Singapore credit terms could pose restrictions on future debt issuances or asset transfers.
- The Asia Pacific gaming industry player, Las Vegas Sands, filed a prospectus with the SEC to sell senior corporate notes and refinance $500 million of debt maturing in June.
- A portion of the proceeds from the offering may be used for share repurchases, as indicated in the prospectus.
- In the financial sector, refinancing is a common strategy for enterprises to extend their maturity profiles and potentially lower interest costs.
- Fitch Ratings stated that Las Vegas Sands' upcoming bond issue is unlikely to strain its balance sheet significantly, with earnings before interest, taxes, depreciation, and amortization (EBITDA) leverage at 3.4x at year-end 2024.
- The gaming company's credit profile stands favorably compared to other players in the industry such as MGM Resorts International and Wynn Resorts, which have lower ratings.
- Economic prudence demonstrated by Las Vegas Sands during the COVID-19 pandemic, including temporarily halting shareholder returns, has been acknowledged by Fitch Ratings.
- As part of its debt management strategy, Las Vegas Sands is planning to use the proceeds from the refinancing to redeem the maturing $500 million bond, aiming to alleviate any liquidity concerns that might arise.