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Las Vegas Sands going public with $21 shares

Nov 30, 2004 5:16 AM

Two years ago, Steve Wynn asked Wall Street to buy shares in Wynn Resorts Limited, a company that had great plans but no revenue producing operations. His initial offering of 34.6 million shares was priced at $13 a share.

Last month, still without revenues, the company offered another 7.5 million shares for sale, but this time the price was $60.43.

Now investors are pondering another initial public offering. That of Las Vegas Sands Inc. (LVS), a company that operates The Venetian Hotel/Casino, one of the most successful properties on the Las Vegas Strip, as well as a "cash cow" casino in Macau.

The company said the offering, expected to be made within the early part of December, will be for 23.8 million shares with the underwriters having the option to purchase an additional 3.5 million shares. The IPO price will be $21 a share.

In a filing with the Securities and Exchange Commission, the company said it plans to raise between $466.3 million and $536.8 million through the offering. Also, it said, the company could have a market capitalization of $6.8 billion, making it the third largest gambling company in the world behind Harrah’s Entertainment Inc. (HET), which is in the process of acquiring Caesars Entertainment Inc. (CZR) and MGM MIRAGE Inc. (MGG), whose plan to acquire Mandalay Resort Group (MBG) is awaiting federal approval.

Las Vegas Sands said the proceeds of its IPO will be used to help pay the $1.6 billion cost of its 3,000 Palazzo mega-resort. When the project is completed, the combined Venetian, Palazzo and Sands Expo and Convention Center will have more than 7,000 rooms and suites and will be the largest such resort and convention center in the world.

The LVS public offering is being made in the wake of recent downgrades of the WYNN stock by some gaming analysts whose reasoning fell mostly in the company’s current valuation and not on its potential for success. The Wynn Resort will open in April 2005.

Ho going strong

Macau gaming tycoon Stanley Ho has shown that he is not about to just lie down and permit his four-decade gaming monopoly be overwhelmed by the likes of Las Vegas gamers such as Steve Wynn and Sheldon Adelson.

Just before Christmas, Ho will open the doors on the first phase of the Macau Greek Mythology Casino at the New Century Hotel. The property is owned by a subsidiary of Ho’s Macau Gaming Co.

The new gaming property will have 228 tables and a gaming floor spanning 160,000 square feet. In February, he will open the second phase that will double the gaming space.

Just last week, Ho announced a partnership with Australia’s richest man, Kerry Packer, in another Macau development project that will involve a hotel and a casino.

Real estate deal

Boyd Gaming Inc. (BYD) announced last week it had purchased 13 acres of real estate bordering on its property at the Stardust Hotel and Casino on the Las Vegas Strip.

The company said it was not prepared to reveal plans for the property since it is still working on a master redevelopment plan for the Stardust site.

By buying the 13 acres for $43 million, Boyd Gaming has increased the Stardust property to 63 acres owned and nine acres leased. It makes the property one of the most desirable sites for development on the Las Vegas Strip.

Recently, MGM MIRAGE Inc. (MGG) announced plans for a mega-city development on land north of the Monte Carlo Hotel/Casino. And still under construction, near the Stardust, are the Wynn Resort and the Venetian’s Palazzo.

Temporary relief

The Jemez Pueblo Indians have offered to compensate the county for expenses the county may incur if a tribal casino is located in Dona Ana County, New Mexico.

The intergovernmental agreement offered by the Pueblo was scheduled for discussion by the county last week but the agenda item was withdrawn at the last minute.

That was good news for former Las Vegas gaming machine manufacturer Stan Fulton whose Sunland Park racino would be adversely impacted by a nearby casino.

Critics of the Pueblo plan charge that it would set "a dangerous precedent in New Mexico leading to proliferation of off-reservation casinos."

No timetable has been established for further discussion of the Pueblo plan.

A matter of money

Since New York State permitted the first Indian casino to begin operating, the Oneida Indian Nation has been the dominant player, especially with its Turning Stone Casino.

But their prominent role could be jeopardized by an agreement recently signed by Gov. George Pataki and the Cayuga Indian Nation of New York. The pact calls for permission to build a casino in the Catskills and the opportunity for the tribe to pick up about 2,500 acres of land in the Finger Lakes region southeast of Rochester.

With a gaming operation that shows a profit of more than $70 million a year, the Oneidas are not thrilled to have another tribe move in to provide gaming competition.

So far, the Oneidas have been able to restrict the gaming areas to the northern part of the state where the Mohawks have a small operation and the Senecas have a casino in Niagara Falls.

As for the Catskills, gaming experts have dubbed the area a potential gold mine.

Rosecroft sale

The on-again, off-again sale of Rosecroft Raceway in Maryland may finally be in the on-again stage with the announcement that the Angelos family members have agreed to acquire the harness racing facility.

The wife and son of Baltimore Orioles majority owner Peter Angelos will pay $13 million for the Oxon Hill track and hope that the state approves slot machines for the track that has been a loser for several years.

A spokesman for the Angelos said the new owners hope to receive approve for between 2,500 and 3,500 video lottery machines so they can build a hotel and convert the facility into a resort destination.

The issue of slots at racetracks has been debated for more than two years without a consensus developing between the proponents and opponents.

THE INSIDER: Mandalay Resort Group (MBG) will announce its third quarter earnings at 1:30 p.m. on Thursday, Dec. 2. Analysts are looking for $0.88 per share earnings, a 31% gain over last year’s $0.67 per share.

Scientific Games Corporation (SGMS) said it has received a two-year contract extension from the Iowa Lottery that is valued at $14 million.

Aztar Corporation (AZR) has opened The Quarter at Tropicana, a $280 million expansion of its Tropicana Casino and Resort in Atlantic City. The property now has 2,125 rooms, the most of any hotel in New Jersey.

Hooters Air has agreed to take over the twice-weekly flights from Rockford, Ill., to Las Vegas formerly flown by TransMeridian Airlines.

Penn National Gaming Inc. (PENN) was advised last week that its plans for a $75 million racino at Bangor Raceway in Maine had been approved by the city council. Construction on the building that will hold 1,500 slot machines will begin in May 2005.

The Malaysian gaming company, Genting Bhd., has joined with Britain’s Stanley Leisure on a venture to develop large casinos in the U.K.

The Pennsylvania Gaming Control Board will hold its first meeting sometime during the middle of December, according to its new chairman, Tad Decker.