HONG KONG: Sands China Ltd and its parent, the casino company controlled by billionaire Sheldon Adelson, raised HK$19.4 billion ($2.5 billion) in a Hong Kong initial public offering conducted at the bottom of the marketed range.

The Macao casino operator and parent Las Vegas Sands Corp sold 1.87 billion shares, a 23.2 percent stake, at HK$10.38 each, according to Bloomberg data. The sale, at the lowest of a HK$10.38 to HK$13.88 price range, values Sands China at HK$83.5 billion, based on Bloomberg calculations using information from the prospectus.

The price is "not too bad given the sector is not that hot right now", Billy Ng, a Hong Kong-based analyst at JPMorgan Chase & Co, said yesterday.

Sands China's share of the proceeds, together with $1.75 billion in bank financing, will help it resume construction of a 13.3 million square-foot casino-resort. Adelson, Las Vegas Sands' 76-year-old chairman, is betting that more convention space, hotel beds and shopping malls will entice visitors to stay longer and boost Macao's non-gambling revenue.

Project completion will strengthen Adelson's challenge to 87-year-old Stanley Ho, who controls SJM Holdings Ltd, the biggest casino operator by market share in Macao, the world's largest gambling hub. The Sands' project was halted in November 2008 after credit markets seized up and revenue dwindled.

Sands China's IPO gives it an enterprise value of 13.5 times next year's earnings before interest, tax, depreciation and amortization, according to a person familiar with the sale. Wynn Macao Ltd was valued at 14.5 times on the same basis when it sold shares in October.

Enterprise value measures stock market capitalization plus preferred equity and interest-bearing debt, minus cash and equivalents.

Sands China's shares are expected to start trading in Hong Kong on November 30, its prospectus said.

"This IPO demonstrates that Asia has the liquidity available for US firms looking to develop leisure assets," independent industry strategist Jonathan Galaviz said November 21. "A bet on Macao is a bet on the greater Asian economic story, so if you believe in Asia you've got to believe in Macao."

Sands China will open most of its stalled resort in Macao by December 2011, Michael Leven, chief operating officer of the parent, said on November 15.

The project, on what is known as sites 5 and 6 on the Cotai Strip opposite its flagship Venetian Macao, would add 6,000 rooms to the 3,554 Sands had in the city as of June 30, according to its prospectus.

Sands China may restart construction as early as January, Steve Jacobs, chief executive of Sands China, said in an earlier briefing. Sands spokesman Ron Reese declined to comment on the IPO pricing.

Bloomberg News

(HK Edition 11/24/2009 page4)