Sands China Can Survive at Least Through 2022 End, Says Company

Sands China, the Macau arm of Las Vegas Sands (NYSE:LVS), said it drew $201 million on a credit revolver last month, providing the gaming company with enough capital to survive through the end of this year.

The owner of five integrated resorts in the world’s largest casino center announced a Form F-4 filing with the Securities and Exchange Commission (SEC). Sands China noted it has $1.54 billion remaining on that credit facility.

The filing emerges about a week after Morgan Stanley analysts saw Macau operators as rapidly burning through cash, pointing to Sands China and MGM China as having enough capital to survive just nine months at current burn rates.

Based on the current forecasts, we believe we are able to support continuing operations, complete the major construction projects that are underway and respond to the current COVID-19 pandemic challenges for at least 12 months from the end of the reporting period,” said Sands China in the filing.

Morgan Stanley estimates Macau concessionaires are burning $800 million per quarter, with the most imperiled by the Grand Lisboa operator SJM Holdings. The bank added Galaxy Entertainment is the only one of the six operators in the special administrative region (SAR) that doesn’t need to raise capital over the near term.

Sands China Remains Optimistic

Further muddying the financial waters for Macau concessionaires are growing debt burdens. Last month, Morgan Stanley said the six operators have a combined $20 billion in liabilities, which could jump to $23 billion by the end of this year. That’s up from just $5 billion prior to the onset of the coronavirus pandemic.

Despite the headwinds, Sands China remains bullish on Macau. It doesn’t have much choice, as the SAR is home to five of its six integrated resorts, with the other being Marina Bay Sands in Singapore.

“We believe visitation [to Macau] will return to pre-pandemic levels and will continue to experience meaningful long-term growth,” said the company in the SEC filing.”

Near-Term Outlook

China’s zero-tolerance regarding the coronavirus is a significant drag on tourism and an obvious headwind for Macau’s recovery efforts.

Last month, the negative test to enter casinos mandate was scrapped. But a mask requirement remains in place, as do limits on the number of players at table games and spacing requirements for slot play.

“Management is currently unable to determine when the remaining measures will be eased or cease to be necessary,” said Sands.