Las Vegas Sands (NYSE: LVS) has slightly increased its ownership stake in its Sands China unit, raising its equity ownership in the Macau casino giant to just over 75%.
In a Tuesday regulatory filing with the Hong Kong Stock Exchange — the home bourse for Sands China — the two companies disclosed that the US-based parent, through an indirect wholly controlled unit, acquired 1.62 million shares of Sands China on the open market.
Although the transaction amounted to only $2.85 million, it raised Sands’ position in the Macau concessionaire to 75.01% from 74.8%.
Las Vegas-based Sands had previously indicated its intention to gradually increase its stake in the Macau unit, which operates five integrated resorts in the Chinese territory where casino gaming is permitted.
Significance of Increased Sands China Stake
While Las Vegas Sands’ purchase of less than $3 million in Sands China equity may seem insignificant, the company now holding over 75% interest in the Macau operator is noteworthy from a regulatory standpoint.
The Hong Kong Stock Exchange mandates that member firms publicly float at least 25% of their shares, with exceptions available for companies failing to meet this requirement to transition to the “Alternative Threshold.” Sands China confirmed this transition.
“The Company announces that, with effect from the Latest Practicable Date, the Company has changed its reliance from the Initial Prescribed Threshold to the Alternative Threshold for compliance with Rule 13.32B of the Listing Rules, which also allows greater flexibility for the Group in conducting transactions for capital management purposes in the future,” according to a regulatory filing with the Hong Kong Stock Exchange.
Sands China’s five Macau properties include the Londoner, the Parisian, the Plaza, Sands Macau and the Venetian, which is among the most profitable casinos globally.
Additional Financial Insights on Las Vegas Sands
Moody’s Investors Service recently affirmed Las Vegas Sands with a ‘Baa3’ senior unsecured rating and a ‘stable’ outlook, but cautioned that pursuing large-scale projects funded heavily with debt could impact the company’s ratings.
“Continued dividends, share repurchases and the use of secured debt to fund developments also constrain the credit profile,” Moody’s stated.
With the ongoing $8 billion expansion at Marina Bay Sands in Singapore, Moody’s foresees Sands maintaining elevated leverage of at least 3.4x over the next 12 to 18 months.