Las Vegas Sands Files for $350-million IPO
Sands convention center owner will use proceeds to expand internationally
By Margo McCall -- Tradeshow Week, 9/20/2004
Las Vegas Sands, owner of the Sands Expo & Convention Center and Venetian Casino Resort, has filed to raise up to $350 million by selling shares to the public.
The move comes amid heightened competition to fill Las Vegas convention centers and a pair of mega-mergers that would create two of the world's largest casino companies.
Las Vegas Sands plans to use proceeds from the initial public offering to fund existing operations as well as expand in Singapore, Japan, Thailand, the United Kingdom and the United States as opportunities present themselves.
Macau figures prominently in Las Vegas Sands' expansion plans. Its Sands Macao Casino opened in May, and the Macao Venetian Casino Resort, which will include a 3,000-suite hotel, casino and convention center, is set for a 2006 opening. Las Vegas Sands intends to build six other casino and resort properties in Macau, a former Portuguese colony that is now a Chinese gambling mecca.
The timing of the initial public offering, to be underwritten by Goldman Sachs, wasn't disclosed in the company's Sept. 3 filing with the U.S. Securities and Exchange Commission, nor was the planned share price. Shares of the company will trade on the New York Stock Exchange under the ticker symbol "LVS."
Even after shares are offered to the public, the company will still be controlled by Chairman and CEO Sheldon Adelson, who currently owns 72.3 percent of Las Vegas Sands. In the filing, the company warns potential shareholders that "the interests of Mr. Adelson may conflict with your interests."
Adelson, who launched COMDEX and sold it in 1995, will continue to have "significant influence" on the company, stated the registration statement, noting that he will he have say over the composition of the board, actions needing shareholder approval and approval of mergers or asset sales.
As a "controlled company," Las Vegas Sands will be exempt from the requirement for an independent board and compensation committee. In July, Las Vegas Sands acquired all stock in Adelson's Interface Holding, which indirectly owns the Sands Expo & Convention Center, in exchange for 220,370 shares of Las Vegas Sands.
Like Mandalay Resort Group at the other end of the Strip, Las Vegas Sands uses its convention facilities to drive hotel occupancy and casino use. The company credits that strategy for driving first-half 2004 occupancy at the 4,040-room Venetian Casino Resort to 98.8 percent, well above average Las Vegas occupancy in the mid-'80s.
Tradeshows held in the convention facilities currently create more demand for rooms than the Venetian can handle, according to the filing. To capture some of that room demand, Venetian Sands is building the 3,025-room Palazzo Casino Resort, a 50-story building currently under construction at a cost of $1.6 billion and scheduled to open in early 2007. With the Palazzo, Las Vegas Sands believes its holdings will represent the "largest integrated hotel and convention facility in the world."
But competition in Las Vegas to fill exhibit halls remains fierce. Construction of a convention center at the Mandalay Bay Casino Resort and expansion of the LVCC has given tradeshow organizers additional options. With the expansions, the LVCC, an approximately 3.2-million square foot convention and exhibition space facility, and the Mandalay Bay Convention Center, an approximately 1.8-million square foot convention center opened in 2003, will continue to be major competitors of the Sands Expo Center and will be able to solely host many large tradeshows which had previously split space between the Las Vegas Convention Center and the Sands Expo Center, stated the Las Vegas Sands, adding that the full effect of the increased competition has yet to be felt.
MGM Mirage's $7.8-billion purchase of Mandalay Resort Group, as well as the proposed merger between Harrah's Entertainment and Caesars Entertainment will also change the competitive picture among Las Vegas casinos.
The number of visitors to the Sands convention center has declined in recent years, although the number of show days has been on the rise. According to the filing, in 2003 the venue recorded 116 show days and received 7,707 visitors per day, compared with 110 show days and 9,445 visitors per day in 2001.
