Business Context and Reporting Period
Company: Las Vegas Sands Corp. (LVSC)
Reporting Date: December 28, 2007 (Report filed January 4, 2008)
Subject: Entry into a Material Definitive Agreement and Creation of Direct Financial Obligations.
Context: Marina Bay Sands Pte. Ltd. (MBS), a subsidiary of LVSC, secured financing for the Marina Bay Sands integrated resort project (IR Project) in Singapore.
Key Financial Metrics and Facility Details
Total Facility Size: SGD $5,442,604,530 (approx. US$3.8 billion based on Jan 4, 2008 exchange rate of 1.43 SGD/USD).
- Facility A: SGD $2.0 billion term loan (available until Jan 25, 2008).
- Facility B: SGD $2.75 billion term loan (delayed draw until Dec 31, 2010).
- Facility C: SGD $192.6 million banker's guarantee facility.
- Facility D: SGD $500 million revolving credit facility (available until Feb 28, 2015).
Interest Rates: Singapore SWAP Offer Rate + 2.25% per annum.
Commitment Fees: 1.125% on undrawn Facility B; 0.90% on undrawn Facility D.
Guarantee Commission: 2.25% per annum on outstanding guarantees.
Maturity: All facilities mature on March 31, 2015.
Debt Cap: Maximum 80% of project costs may be funded by debt; remainder requires equity or subordinated loans from LVSC.
Material Changes and Use of Proceeds
Refinancing: Proceeds from Facility A will repay approximately SGD $1.915 billion in existing principal and accrued interest related to prior floating rate notes and bank loan facilities.
Project Funding: Remaining net proceeds will fund design, development, construction, equipping, and pre-opening costs for the IR Project.
Equity Contribution: LVSC is required to contribute at least SGD $800 million to MBS on or before the first funding date.
Guidance, Covenants, and Risks
Repayment Obligations:
- Quarterly mandatory prepayments of SGD $125 million commence March 31, 2011.
- Excess Cash Flow Sweep required after the third full quarter of operations, subject to debt-to-EBITDA ratios.
Financial Covenants (Post-Commencement):
- Max Debt-to-Adjusted EBITDA: 5.50:1.0 (decreasing thereafter).
- Min Adjusted EBITDA-to-Interest Expense: 3.00:1.0 (increasing thereafter).
- Min Adjusted EBITDA: SGD $800 million per year (rolling 4 quarters).
- Positive Consolidated Net Worth.
Sponsor Support: LVSC has entered a Sponsor Support Agreement agreeing to cover all cost overruns and ensure project completion by December 31, 2010 (subject to force majeure).
Risks: Events of default include failure to obtain the casino license, termination of the Development Agreement, insolvency, or failure to meet financial covenants.
Investor Verification Checklist
- Verify the actual drawdown date and amount of Facility A (expected prior to Jan 25, 2008).
- Confirm the status of the SGD $800 million equity contribution from LVSC.
- Monitor construction progress against the December 31, 2010 operational deadline.
- Track the Singapore SWAP Offer Rate fluctuations impacting interest costs.
- Review future filings for compliance with the 5.50:1.0 debt-to-EBITDA covenant once operations commence.