Sands China Issues $1.5B of Unsecured Debt to Boost Liquidity

Sands China Ltd, a subsidiary of casino giant Las Vegas Sands (LVS), announced in a filing to the Hong Kong Exchange (HKEX) it entered into agreement for the issuance of senior unsecured notes to the amount of $1.5 billion. The proposed debt is being offered and  sold  only  to  Professional  Investors  that  are  qualified  institutional  buyers.

More Debt for LVS’s Chinese Subsidiary

The operator of casino properties in Macau and Singapore is issuing two series of notes, $800 million and $700 million, paying interest of 3.800% and 4.375% per annum, paid semi-annually in arrears, and have maturity dates of January 8, 2026, and June 18, 2030, respectively. Interest rates on both series may be adjusted in case a downgrade of the credit rating of the notes by certain credit rating agencies takes place.

Sands China is selling general unsecured obligations that will rank equally in right of payment with all future senior unsecured debt issued by the company, will rank senior to future subordinated debt, and be subordinated to future secured debt to the extent of its asset value, and subordinated to all existing and future obligations of the company’s subsidiaries.

The net proceedings of the sale estimated to be around $1.48 billion will be used by the company to boost its overall liquidity, as well as for general corporate purposes. Barclays Capital Inc, BofA Securities, Inc and Goldman Sachs & Co. LLC are the representatives of the initial purchasers for the notes sale that is expected to be complete by Thursday, June 4.

Industry Uncertainty Requires Pre-Emptive Moves

Explaining the reasons for the issuance of the notes, Sands China outlined the level of uncertainty regarding when or how quickly the current travel restrictions will be modified or lifted, as well as the impact of the ongoing situation regarding its customers’ spend on travel and entertainment.

Casinos in Macau and Singapore, the two jurisdictions Sands China has gaming venues, have different fate, yet both feeling the impact of the ongoing health and travel restrictions. Casinos revenue in Macau plummeted by 93.2% in May, despite being re-opened almost two months ago, but being in the strong grip of the travel restrictions imposed from mainland China to the Special Administrative Region, while Marina Bay Sands, Sands China’s Singapore casino resort, will remain closed for an undefined period of time.

Sands China pointed out in the announcement that its financial position remains strong, with a total liquidity of $2.41 billion as of May 29, of which $800 million total cash and cash equivalents, and the rest available under its revolving unsecured credit facility.

The company is convinced its financial position will enable it to sustain continuing operations, complete undergoing major construction projects and weather the challenges with regards to the ongoing health risk-related situation.