HONG KONG: Sands China, the Macao unit of casino operator Las Vegas Sands Corp, aims to boost its market share in Macao to over 30 percent from the current 24 percent after completing its stalled resort and gaming projects in Cotai Strip with the funds raised from its upcoming planned IPO.

The company, which currently operates three casinos in Macao including the Venetian, is selling 1.27 billion new shares while its parent is selling 600 million existing Sands China shares both at HK$10.38-13.88 per share, raising as much as HK$26 billion in total in what will be the second largest initial public offering (IPO) in Hong Kong this year.

Assuming that the share price is set at HK$12.13, the mid-point of the offer price range, the net proceeds from its global share offering will be around HK$14.72 billion, the company said in a statement.

Sands China plans to use HK$6.35 billion, or around 43 percent, of the net proceeds from the IPO to repay its debts.

It also intends to use about HK$3.88 billion of the net proceeds in conjunction with project financing to complete construction of the integrated resort on Parcels 5 & 6 in its Cotai Strip development, which was stalled due to tight liquidity during the global financial crisis.

It has recently secured commitments of US$1.45 billion in project financing for the Cotai Strip development.

Sands China could resume building the 13.3 million-square-foot resort as early as January next year, and was expected to open the first phase of the project in June 2011, Chief Executive Officer Steven Jacobs told a video conference in Hong Kong over the weekend.

The company aimed to raise its market share in Macao to over 30 percent from its current 22-24 percent after completing the Cotai Strip project, he added.

This could threaten rival SJM Holdings Ltd's industry leadership. SJM, Hong Kong tycoon Stanley Ho's gaming flagship, currently has a market share of 28 percent.

Jacobs also said Sands China's core profit was expected to grow by 15 percent to $803 million in 2009 from $696 million last year.

Sands China's ambition is to be the number one player in Macao's gaming industry. While its profit forecast for this year looks good, some analysts are cautious about the prospects for the industry in general and for Sands China in particular.

"The stock isn't particularly attractive, as the pricing is not low on the one hand, and the development of the industry is constrained by government policies on the other," said Mark To, an associate director at Prudential Brokerage.

With more than 50 percent visitor arrivals coming from the mainland in recent years, the gaming and resort industry in Macao is susceptible to changes in Mainland's travel regulations.

The price range of HK$10.13-13.88 represents 13-16 times the stock's expected EBITDA (earnings before interest, tax, depreciation and amortization) for 2009, compared with the 14-15 times ratio for its peers, said Donald Cheng, an analyst at Taifook Securities, who covers hotel and gaming stocks.

Cheng also raised concerns about policy uncertainty. The Macao government is studying plans to cap gaming tables and slot machines in the gambling enclave, and to raise the permissible age for casino entry to 21 year from the current 18, he said.

Trading of the shares is scheduled to start on November 30. Citigroup, Goldman Sachs and UBS AG are the joint global coordinators for the IPO. They are also book-runners for the deal, along with BNP Paribas and Barclays, sources said.

(HK Edition 11/17/2009 page4)