Capital Markets

Sands, Ellis Group Offer Shares — as Backup

Casino company and real-estate broker each had other financing plans, but they fell through.
Stephen TaubNovember 11, 2008

Two companies have decided to tap the equity markets for financing — but hardly from a position of strength.

One company is Las Vegas Sands Corp., which said it priced nearly 182 million shares of common stock at $5.50 apiece, along with about 5.25 million shares of preferred stock and warrants to buy 87.5 million shares of common stock at an exercise price of $6 per share. The other is CB Richard Ellis Group Inc., which filed plans to offer 50 million shares, after earlier plans fell through to raise up to $400 million in a private offering.

Las Vegas Sands, a gaming company that has holdings including the Venetian resort hotel and casino, agreed to sell the 5.25 million preferred shares and the warrants to purchase the 87.5 million common shares to Sheldon G. Adelson, company chairman, CEO, and principal stockholder. The exercise price for the warrants is $6 per share.

Under the deal, the Adelson family will convert its 6.5 percent convertible senior notes due 2013 into common at a conversion price equal to the public offering price of $5.50 per share for the common stock.

The stock traded as high as $140 a share in October 2007.

The arrangement with the Adelson family would normally require shareholder approval under New York Stock Exchange rules. However, the board’s audit committee approved the company’s omission to seek shareholder approval after it determined that any delay would “seriously jeopardize” the company’s financial viability, and the ability to complete the offerings. The company said it would mail a letter to all shareholders notifying them of the common issuance after the convertible notes are converted.

Sands made these moves a week after warning that it may default on $5.2 billion in credit facilities secured by its Las Vegas operations, according to Bloomberg News. On Monday, the company reported weaker-than-expected third-quarter results, and said it suspended several projects.

As for the CB Richard Ellis offering, the giant real estate broker said that it intends to use the proceeds for general corporate purposes. Credit Suisse Securities (USA) LLC and Banc of America Securities LLC will act as joint bookrunning managers for the offering.

“The fact that the company failed in its attempt to raise money in a private placement indicates that at Friday’s closing prices, the company wasn’t that attractive to certain investors,” Will Marks, an analyst with JMP Securities, told Bloomberg News.

The stock fell 14 percent on Monday after dropping 26 percent earlier in the day. The shares then dropped another 24 percent on Tuesday.

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