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Monday November 23, 2009

Sands China raises US$2.5bil from listing


The amount is lower than the company hoped for

HONG KONG: Sands China Ltd, the Macau operation of Las Vegas Sands, raised US$2.5bil through its initial public offering (IPO) in Hong Kong, a source familiar with the deal said on Saturday, hitting the bottom of an indicated range.

While lower than the company hoped for, the IPO allows Las Vegas Sands to cash in on the gambling industry boom in Macau, a former Portuguese colony an hour’s ferry ride from Hong Kong that is now the world’s largest gaming hub.

The offering, together with a US$1.75bil in bank financing, would help Sands China to restart its Macau’s Cotai strip project, which was suspended in November 2008 due to the global economic downturn.

The Las Vegas-based gaming and casino company, struggling under a heavy debt load, is looking to raise cash and boost the group’s overall valuation by listing its Macau division in Hong Kong’s red hot IPO market.

Wynn Resorts, another Las Vegas casino group, recently spun off its own Macau unit.

Sands China sold 1.87 billion shares, or about 24% of its enlarged share capital, at HK$10.38 each, compared with a range of HK$10.38 to HK$13.88, the source said. The source was not authorised to speak on the record about the pricing.

”Investors are cautious with Sands China, because the post-market performance of Wynn Macau was disappointing,” said Peter Pak, vice-president at BOCI Research Ltd. Shares of Wynn Macau, which raised US$1.87bil through its Hong Kong IPO this month, were trading 7% lower than their offering price of HK$10.08.

On a 2010 enterprise value to earnings before interest, tax, depreciation and amortisation ratio, Sands China trades at 13.5 times based on its low-end price range, versus Wynn Macau’s about 14 times.

By comparison, Melco Crown Entertainment and Galaxy Entertainment Group traded at 11.5 times and 12.1 times, respectively, according to a UBS research report.

Sands China, founded by billionaire Sheldon Adelson, could be valued at US$10.8bil based on the low end of its price range. Wynn Macau has a market value of US$6.3bil.

Sands was the first US casino operator to enter Macau in 2004 after the government opened the gambling market to outsiders. Sands China owns Venetian Macau Ltd, one of the six concessionaries that are permitted to own and operate casinos in Macau, with 24% and 25% market shares of gross gaming revenues in Macau in 2008 and the first half of 2009. — Reuters


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