Las Vegas Sands' filing has analysts perplexed

Nov 11, 2008 5:10 PM

Gaming Insider by Phil Hevener |

That Las Vegas Sands announcement: what did it all mean?

Was this a good time to buy a lot of LVS stock … cheap?

They wondered if LVS’ opportunistic Chairman Sheldon Adelson might have been toying with exactly this notion last week when the company’s SEC filing that declared the possibility of very serious money problems hit business pages everywhere.

Or maybe the better idea was to jump ship, so to speak.

Company auditors reportedly believed the filing was necessary, but necessity sometimes creates opportunity.

"What’s Sheldon up to now," wondered a financially savvy but always cynical executive in another company. "That was the first thought to cross my mind."

That kind of thinking was fueled by the fact Nevada gaming regulators did not know anything about the filing until they heard about it through the news media. This is not their idea of keeping state officials informed.

The filing did not say there would be trouble. Neither did it say there wouldn’t. It merely made mention of the fact that unless the Las Vegas-based company finds some serious financing to pay certain upcoming obligations it would probably find itself in violation of existing loan covenants requiring that certain ratios be maintained.

And that would not be good, the filing said in so many words.

This is no more or less than the same situation Harrah’s and Station Casinos supposedly found themselves in not so many weeks ago. The difference: They are privately owned companies with few if any obligations to keep the SEC up to speed. Covenant violations are a matter between them and their bankers.

The Sands is publicly traded and must make SEC filings that are closely followed by industry followers including analysts in the financial world. Ever vigilant analysts live for those occasions when they can fire off notes to investors explaining why companies are doing well or not so well. The consequence of such notes released into very public forums is that stock prices can rise or fall in a hurry.

Which is what happened with the Sands stock, the price dropping into the mid-single digits just days after it had bounded into the mid-teens.

Nevada gaming controllers were still waiting late last week to get an explanation from the company, according to a source familiar with what’s happening at the Gaming Control Board.

Conspiracy buffs were running amok as they considered all the possibilities. Were Las Vegas Sands and its chairman hoping to reap benefits that might be associated with a required filing?

Maybe not … sometimes a cigar is just a cigar.

A top executive with another company, a company that competes with Adelson for high-end business, cautioned against going too far with speculation about the Sands boss trying to do anything except keep the company afloat and moving forward.

"I really do believe Sheldon is more concerned with trying to keep the company alive. Even if he got his hands on all the outstanding stock he would still have to find some way to manage the debt and I don’t think even he could find enough money to do all that."

He drove the point home with a final thought: "Survivability has become a big issue for a number of companies in this industry."

It was left to MGM Mirage Senior VP Alan Feldman to take a long look at a thought that has troubled executives at a number of publicly traded companies during recent weeks as stocks have bounced this way and that.

"The market," he said, "has to find a way to differentiate between companies."

He’s right.

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