Print
E-mail
Share
digg
Newsvine
Facebook
Stumble
Technorati
reddit
Fark
twitterGAMING:
Las Vegas Sands warns of potential bankruptcy
Published Thursday, Nov. 6, 2008 | 9:06 a.m.
Updated Thursday, Nov. 6, 2008 | 5:05 p.m.
Las Vegas Sands, which owns the Venetian and Palazzo casinos, this morning warned investors that there is "substantial doubt about the company's ability to continue as a going concern" because of the company's failure to maintain a certain ratio of debt to earnings as required by its lenders.
In a filing with the Securities and Exchange Commission, the company said it would not be in compliance with the so-called maximum leverage ratio for the fourth quarter and in subsequent quarters – a situation caused by falling earnings that haven't kept pace with outstanding loans amid this downturn.
Defaulting on these bank agreements will trigger defaults on other outstanding loans, allowing all of the lenders to demand repayment, which could push the company into bankruptcy.
Such disclosures are typical for companies a step away from bankruptcy court. But some analysts hold out hope that the company will be successful in a last-ditch effort to raise additional financing. (The company filed a separate notice this morning in preparation for issuing securities, which could include stock or bonds.)
Other options include delaying or scaling back such projects as the company's under-construction resorts in Macau and its St. Regis-branded condos at the Palazzo. The company said this morning it was evaluating the possibility of scaling back spending on its global projects.
"We still expect Mr. Adelson to put new money into the company and believe they are working on the possibility of getting others to participate," Jefferies & Co. stock analyst Larry Klatzkin said in a research note this morning.
Klatzkin said the filing officially declared what investors have known for some time, that the company faces a default and is acting to prevent it.
Most analysts are recommending investors hold or sell the shares, which have lost 90 percent of their value over the past year. The company has been one of the gaming companies hardest hit by the credit crisis because of its high debt load and aggressive growth pipeline. Also, the Palazzo's earnings have been especially poor since the property opened in January.
Less likely to be shelved, analysts say, are the company's Sands Bethworks resort in Pennsylvania and its $3.6 billion Marina Bay Sands resort in Singapore, both expected to open next year.
Deutsche Bank stock analyst Bill Lerner said he expects some combination of raising capital and cost cutting, either from delaying or scaling back certain projects. Las Vegas Sands Chief Executive Sheldon Adelson could also pony up more cash, as the Adelson family in September, Lerner said.
Another option, boosting earnings, is unlikely.
Next week, Las Vegas Sands will report third quarter earnings that are expected to be down from a year ago. Analysts have reduced those projections in recent weeks.
What Las Vegas Sands needs now, but can't be bought, is time.
To stay out of default with its lenders, the company must seek waivers or amendments to its bank agreements. It's unclear how willing lenders will be to give the company time to work through this economy and raise additional money at reasonable cost.
Discussion: 36 comments so far…
Post a comment
- Most Read
- Discussed
- Most E-mailed
- Miguel Cotto turns up heat readying for Manny Pacquiao
- Joe Perry: Steven Tyler has quit Aerosmith
- Fontainebleau subcontractors organize to finish project
- Phil Hellmuth breaks down Main Event final table
- Metro officer’s fatal shooting of teen ruled justified
- New Mexico soccer player goes MMA on BYU
- MGM Mirage following Harrah’s lead on marketing conventions
- Judge dismisses suits blaming Las Vegas Sands for stock drop
- Success: UNLV hits mark of $500 million in cash and pledges
- UNLV hoopsters ready for some unfamiliar faces
Blogs
Miech Again
On the road to Long Beach, UNLV hoops style (12 Comments)
The Kats Report
Vocal strain prompts Wayne Brady to call off 'Making It Up' until 2010
The Greene Room
New Mexico soccer player goes MMA on BYU (12 Comments)
Elsewhere
Fontainebleau suit takes aim at Soffer empire (4 Comments)
Mono puts date for Lesnar title defense in question
The Kats Report
Got a question for Wayne Newton? Or a favorite story? Send it over (5 Comments)
Now and Then
Rollie's team beats Isiah's team (4 Comments)
Calendar »
- 7 Sat
- 8 Sun
- 9 Mon
- 10 Tue
- 11 Wed
-
Everclear at the Hard Rock Cafe on the Strip
Hard Rock Cafe on Strip | 9 p.m. to 11:59 p.m.
-
UNLV Rebels vs. Colorado State at Sam Boyd Stadium
Sam Boyd Stadium | 7 p.m. to 10 p.m.
-
Eric Burdon and The Animals at Ovation
Ovation | 8 p.m. to 10 p.m.
-
Anjelah Nicole Johnson at The House of Blues
House of Blues | 8 p.m. to 11 p.m.
-
2009 PBR World Finals at The Thomas and Mack Center
The Thomas & Mack Center
-
Roy Clark at The South Point Showroom
South Point Showroom
-
Dennis Blair at the V Theater
V Theatre inside Miracle Mile Shops
The Sun
Locally owned and independent for more than 50 years.
A little less money into Freedom's Watch, a little more money into your company, Mr. Adelson.
thebs writes, "A little less money into Freedom's Watch, a little more money into your company, Mr. Adelson."
Well said! You're fiducially responsible to your company first.
I want to stay at one of these hotels, but they are so expensive (and very nice too) I have no choice but to look and continue walking to excalibur. Low the price and I will stay all 8 days of my regular vacation.
I am so glad we elected Obama president. Las Vegas is going down to ruin and now we are going to raise the tax rate on all corporations. That will help. The tax promises from Obama have the stock market tumbling and $1000 rebate will do nothing when the jobs are gone.
Neiman, the road to our current predicament was paved with low taxes. What's your excuse now? Bush cut taxes for all corporations and look where it got us.
LVS took an unmanageable debt load and expanded too quickly to meet its obligations. You gonna blame that on Obama too?
Where's that sense of Republican responsibility and self-reliance now? Blame, blame, blame.
Adelson's an intelligent man, unfortunately he spent too much time fiddling his fingers in the election and too little time minding his business.
He's got himself to blame for that.
"Bush cut taxes for all corporations "
All corporations got a tax cut????
On what planet did that occur.
Can you quote any source that says a bill signed by Bush gave tax cuts for all corporations?
Can't do it because that is not a factually correct statement?
"I am so glad we elected Obama president. Las Vegas is going down to ruin and now we are going to raise the tax rate on all corporations."
It's a tax on "profits", yes?
To me at all goes around the loop anyway. Tax corporations more, and you and me (well, not you and me) less, we have more so we spend more, which eventually goes back to the corporations. It doesn't just disappear.
What's wrong with this equation?
Bush cut the corporate tax rate and cut the capital gains tax. Both are lower than they were under Clinton. Are you daft, Nance?
Getting back to the topic at hand, where's the finger pointing at Adelson himself for ignoring his tanking corporation while trying to play God with politics?
Bush has never signed a bill that cut the corporate tax rate for all corporations.
Also, corporations do not pay capital gains tax...individuals do.
Forget about Obama. Las Vegas over the last 7 years forgot about its middle of the road clientele & went after nothing but luxury & high rolling whales-thinking the goods times were gonna last forever. Well-nothing lasts forever & what goes around-comes around. Now Vegas has huge hotels-mountains of debt-and empty casinos. You reap what you sow.
Nance, you are (mostly) incorrect. There is a corporate capital gains tax:
http://en.wikipedia.org/wiki/Capital_gai...
And here is where Bush cut corporate tax rates...it was October 2004. The use of the word 'all' is exclusionary, and, therefore, not entirely correct.:
http://www.msnbc.msn.com/id/6307293/
Little research, gang, a little research...
matts7052 you are totally incorrect.
Using Wikipedia as a source is risky for they have proven to highly unreliable because almost anybody can update them.
There is no such thing as a corporate capital gains tax. Corporations pay taxes on income with may include revenue from the sell of property, equipment and land. But they do not play a seperate captial gains tax.
Only individuals pay a capital gains tax.
Bush did not change the corporate capital gains tax because there is no such thing as a corporte capital gains tax.
The MSNBC link refers to corporate tax breaks and not cutting corporate tax rates. Those tax breaks where for specific industries.
theBS said: "Bush cut taxes for all corporations "
"All" is not correct. Bush cut taxes for some corporations and not all. Most of those corporate tax cuts were for the manfacturing industry.
Then theBS said: "Bush cut the corporate tax rate and cut the capital gains tax"
Bush has never sign a bill into law that cut the corporate tax rate. Tax breaks and corporate tax cuts are to different things.
Cutting the captial gains tax has nothing to do with corporate taxes.
Okie dokie, Nance, you didn't like that one? By the way, Wikipedia articles have cited sources with verifiable information. Since you chose not to look, I'll provide the research for you.
Here's another link to corporate capital gains:
http://www.nber.org/digest/apr04/w10153....
And another:
http://www.nationalreview.com/nrof_comme...
If you read (I doubt you did before), corporations are subject to capital gains tax on returns earned as capital gains on intercorporate holdings.
If you had bothered to read my comment, you would have noticed I agreed with you. The use of the word 'all' is exclusive, and I noted that Bush cut some corporate tax rates (I suppose the word exclusionary didn't jive or something).
And where did you receive your MBA?
Still Bush did not cut corporate tax rates or corporate capital gains tax rates for all corporations.
He only signed a law that provided tax breaks for some but not all corporations.
theBS said "ALL" corporations got tax cuts which is wrong.
You probably think I am being picky which is true.
theBS loves to be picky on everything so I am just giving him a taste of his own medicine.
"All" is wrong. "Most" is true.
I was enthusiastic... but I didn't deny the existence of an entire branch of tax law, now did I?
"Effective corporate tax rates then plummeted, thanks to Bush administration-backed tax breaks passed in 2002 and 2003, continued corporate offshore tax-sheltering, and the refusal of the Congress and White House to crack down on even the most abusive inherited corporate tax-sheltering activities."
"Effective tax rates varied widely by industry. Over the 2001-2003 period, industry effective tax rates for the 275 corporations ranged from a low of 1.6 percent to a high of 27.7 percent.
In 2003, the range of industry tax rates was even greater, ranging from a low of -30.0 percent (a negative rate) up to a high of 27.9 percent."
"Other very low-tax industries, paying less than half the statutory 35 percent tax rate over the entire 2001-2003 period, included: transportation (4.3 percent), industrial and farm equipment (6.2 percent), telecommunications (7.5 percent), electronics and electrical equipment (10.8 percent), petroleum and pipelines (13.3 percent), miscellaneous services (14.4 percent), gas and electric utilities (14.4 percent), computers, office equipment, software and data (16.0 percent), and metals & metal products (17.4 percent)."
"Not a single industry paid an effective tax rate of more than 29 percent, either for the entire three-year period or in any given year."
"Over the 2001-2003 period, the 275 Fortune 500 companies that were profitable each year and for which adequate information is publicly available earned almost $1.1 trillion in pretax profits in the United States. Had all of those profits been reported to the Internal Revenue Service (IRS) and taxed at the statutory 35 percent corporate tax rate, then the 275 companies would have paid $370 billion in income taxes over the three years. But instead, the companies reported only about half of their profits - $557 billion - to the IRS. Instead of a 35 percent tax rate, the companies as a group paid a three-year effective tax rate of only 18.4 percent."
So how would one classify Congress and the President signing legislation that allows corporations to pay an effective tax rate that is nearly one-half of the statutory rate?
Um, a tax cut? Effectively? Yes.
Currently, there is no special corporate capital gains tax rate.
Currently the standard corporate income tax rate is applied to all corporate income including capital gains.
"....there is currently no special rate for corporations' capital gains...."
In the past (before 1988) corporations did get a special tax rate for corporate capital gains.
The two articles that you posted are arguing for a return to those days.
http://www.irs.gov/pub/irs-soi/02corate....
I believe you got your info from this link: http://www.reclaimdemocracy.org/corporat...
It mentions four reason why effective tax rates declined during the Bush's term.
3 of the reasons dealt with tax law and policy that was set before Bush came into office.
The only one that Bush did was the Accelerated depreciation tax benefit. Not all corporations utilized the Accelerated depreciation tax benefit.
Therefore not "all" corporations got an effective tax break that was attributable to Bush.
Bush never sign a law that "cut the corporate tax rate" which was at 35% when he came into office and still is at 35%.
Bush never sign a law that "cut the capital gains tax rate" for corporations because currently there is no such thing a seperate tax on corporate capital gains. Corporate capital gains are tax under the income tax rate. Corporate "capital gains" were tax at 35% when Bush started and they are today tax at 35%.
"It mentions four reason why effective tax rates declined during the Bush's term."
"3 of the reasons dealt with tax law and policy that was set before Bush came into office."
Wonk wonk wonk, wrong again.
Stubborn little fella!
"Effective corporate tax rates then plummeted, thanks to Bush administration-backed tax breaks passed in 2002 and 2003, continued corporate offshore tax-sheltering, and the refusal of the Congress and White House to crack down on even the most abusive inherited corporate tax-sheltering activities."
"Therefore not "all" corporations got an effective tax break that was attributable to Bush."
You really do have a problem with reading comprehension, don't you? Go back and re-read my post at 9:47.
The greater point remains true, the tax burden on corporations has decreased under Bush. While quibbling over semantics and denying tax law, you've failed the grasp the main thrust of the argument, Nance.
theBS: "While quibbling over semantics "
Lord to God, the King of semantics has been defeated!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
nance "Using Wikipedia as a source is risky for they have proven to highly unreliable because almost anybody can update them."
Nah! That would make it worthless. It's not worthless at all. It's an excellent source of reliable information. Saying "almost anyone can update" is not accurate. There is more too it than that and the edits (if in doubt) can be checked as well.
Now, what's risky is using conservapedia.com to find out that wikipedia.com is unreliable.
I like this entry...
"The articles on both Saul Alinsky and his book, Rules for Radicals make no mention of his dedication to "the original radical--Lucifer."
What a brilliant dedication! If you consider Lucifer's actions, to me, you cannot exemplify "radical" better than that.
Read through the eyes of a conservative Christian, the spin is inflammatory. Read through the eyes of an intellectual, it is brilliant.
Is this on a page about Saul Alinsky? Nope. This is on the page that tells you why wikipedia is unreliable. To me, it illustrates why conservapedia.com is lame.
How in the hell do statements like this prove that wikipedia is an unreliable source of information? Wikipedia is non-partisan. I'm sure it doesn't say that George Bush is a complete idiot, even though millions of people think that and many of them could edit his entry to that effect.
I think your point is more along the lines of what Stephen Colbert said about facts being liberal. You downplay Wiki because you don't like what it says, not because it's actually wrong. You just don't like the facts there.
You made this same stupid argument the other day while discussing Gore's internet bill. You scoffed at Wiki with the same incorrect argument, while at the same time I was reading the history there, which was reflected EXACTLY how I remembered it.
Scoff at all partisan rags if you want. But wiki is as reliable as anything you quote here for sure. I plan to keep using it that way, fyi, regardless of your "opinion", and will be prepared to defend it every time, as you always require.
Next time somebody quotes wiki, why don't you prove the wiki information wrong instead? That would build some cred with your argument then, with me as well.
the simple reality is that las vegas is NOT recession proof ( i love that statement ) and is going to keep sinking right along with the economy.
the economy is getting worse and worse. just go to google and go to "news" and type in "lay off" or "layoffs" and you'll see how many jobs are being lost. those people are not going to come to vegas.
The Las Vegas of 'old' is dead and gone - they build to cater to the wealthy and the 20/30 somethings who save all year to come here and get into a nightclub - spend all the money they saved on bottle service and then the next day - poof - they're broke and they're gone.
Until Vegas gets back to basics - embraces that which 'made' them to begin with I don't see it getting any better.
IMHO - Vegas will live as long as most casinos follow Benjamin's model.
Make people feel special. Give them a nice place to stay. Give them free drinks and cheap food. Make the money on the casino floor.
Vegas still does that. By and large the model is still alive. The Palazzo offers rooms at $199. with free parking and valet. That's really affordable for a Los Angelino, 33% of our business, and the rooms and hotel are an incredible getaway. I think that's the way it's going to be.
I also do not blame Sheldon or the Sands for the situation. I cannot think of too many people who expected the economy to get this bad this fast or that our financial system would collapse. Most people and organizations have been caught off guard. Bear Sterns? Hello???
Sorry but 200.00 night for a bed is a little too rich for my blood and I imagine it is for a lot of other people as well. If all I have to spend is 200.00 then why not give me a room for 50 bucks, a meal for 20 and I'll give you the rest of my 200 on the gaming floor where I'll at least have some enjoyment out of it. It all boils down to the fact that Vegas (for the most part) is gonna get it all anyway - people just want to have a little fun first before they go home broke.
azsk8fan - Monte Carlo then. $58/nt. Right in the middle of everything. Nice place. Not the Palazzo, but you'll love it, and still have some bucks to play with downstairs. Easy!
Vegas is alive and well and busier than hell. We manifest what we believe. This is what I believe.
Monte Carlo is indeed a night place - I've stayed there before - clean/unassuming and worth the price.
My wife and I plus our relatives went to Vegas from TX at least 2 times a year or more from 1985-2004 and we would stay as much as a week at a time. We used to have a ball each time winning small returns from the slots which we used to keep playing and spending. Around 2004 we saw the slots completely shut down!! They are tied to computers that manage pay offs. It was like tossing your coins in the lake. NO RETURNS !! We have been back once or twice since then and it got worse to where we do not plan on going back. I have a lake at home to throw my money in and I do not have to fly there to do it. I actually predicted to my wife that one day ALL the tourists would realize the rip off and that Vegas would dry up. Vegas cut its own throat with its greed. High rollers will never fill all your rooms !!!
too true rpl.
The path to riches is with the largest crowd. Only a couple of casinos or parts of casinos can cater to the high rollers. That's the problem. You can't make 100% of the casino for the richest 10%. You make slots too expensive/tight, people stop playing. You make the tables too expensive, or put those god-aweful auto-shufflers on too many blackjack tables, people stop playing.
Vegas can't keep acting like most people come here with a few thousand to spend. Push goes to shove, people will do what me and my friends used to do, walk done the Strip with your own booze, taking in the sights.
Everyone all the time can't afford $50+/plate meals, $300+ club experiences, and other ridiculous fringes.
I honestly think in the next year or two Vegas needs to do a lot of soul searching to rediscover a formula to make itself profitable again.
I was actually referring to judging Wright's comments, versus Obama attending and hearing them or not.
I've heard some doosies at churches I've attended before. Sermons can get pretty fiery. Taken out of context, you might think of them as extremely controversial. But in the context of making a point about something, they might sound completely different.
It's seems unfair to judge the comments outside the context of the whole sermon, or even a string of sermons. We just do not know about that part. That's what I was referring to.
I have no idea how it ended up on this story. Please excuse.
It seems America still loves to see rich and powerful people fall (Adelson). And besides, the casinos hold a gun to your head and force you to gamble then they take your money. Before we crucify them all, can we take a minute to consider the over 10,000 people who make a living off of Adelsons' investment. Granted, Vegas has gotten greedier since it's gone corporate but there are a lot of innocent bystanders that are going down with these casinos.
hey soxfan, I agree with what you said. Sometimes it seems like people are rooting for the big guys to fail as if it's fun to watch. Hell, sometimes I feel like they want Vegas to fail just so that can say "I told you so!".
As far as being greedy. Well, some here never venture to the Indian Casinos apparently. Nevada casinos by and large are much more generous.
My suggestion for locals who gamble is to stay the hell away from the Strip and leave it for the tourists. I always have better luck at the suburbans. GVR, Sunset, Fiesta, etc... Better service and fewer crowds too.
The Venetian in Macau will soon have a Chinese owner.
By and large Las Vegas is no longer the great value that it was 20 years ago. Rooms and meals are as high (or higher) than any other major city.
Also lacking is the personal service that was once the norm.
I get emails from strip properties, grudgingly giving some pretty good deals on rooms. However these deals are usually announced too late for me to make arrangements to take advantage.