Wynn, Sands may see Hong Kong IPOs

Jun 20, 2009 3:09 AM
Staff & Wire Reports |

Both Wynn Resorts Ltd. and Las Vegas Sands Corp. could benefit from the potential spin off of some of their Macau assets through Hong Kong initial public offerings, an analyst said Friday.

For the Sheldon Adelson-led Las Vegas Sands (LVS), the IPO could help raise $1.1 billion and be put toward reducing its debt burden, Bernstein Research's Janet Brashear said.

"We believe that the money raised in a Hong Kong IPO could be used to repay a substantial portion of the $1.4 billion intracompany loan that Las Vegas Sands' parent company recently made to its Asian subsidiaries," Brashear wrote in a client note.

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While Wynn (WYNN) does not have the same debt concerns, Brashear figures its potential IPO could generate $2 billion and help the casino operator with some investments.

"Unless Wynn has a way to repatriate cash to the U.S. in a tax-efficient fashion, one might assume these proceeds are reinvested overseas, perhaps in a Cotai resort or another emerging opportunity," the analyst said.

While reports indicate the casino operators would likely only sell minority interests, such a move could lower Wynn's 2010 earnings by 23 cents per share and trim Las Vegas Sands' profit by 2 cents per share that year, Brashear explained.

She maintained Las Vegas Sands' "Outperform" rating and Wynn's "Market Perform" rating.

Shares of Las Vegas Sands added 41 cents, or 5.3 percent, to $8.14 in morning trading, while Wynn's stock rose $1.18, or 3.3 percent, to $36.78.

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