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Owner of the Venetian casino warns on debt woes

November 6, 2008 | 10:51 am

Shares of Las Vegas Sands Corp., owner of the Venetian hotel and casino, are plummeting today after the company warned that it could face bankruptcy.

The firm, controlled by billionaire Sheldon Adelson, is deep in debt and strapped for new capital, at a time when casino traffic is dwindling as consumers slash their spending.

From Bloomberg News:

The casino owner, which had $8.8 billion in long-term debt at the end of June, said in a regulatory filing today that it probably won't meet the requirements of some loans unless it cuts spending on development projects, boosts earnings at its Las Vegas Strip casinos and raises more capital.

Sheladelson The reversal of fortune is a black eye for the 75-year-old Adelson, who was once America's third-richest man on the strength of his Las Vegas Sands holdings. The company's dwindling cash flow is threatening $16 billion worth of developments in Macau, China, and Singapore, where Las Vegas Sands is building resorts to cater to wealthy Asian gamblers.

Spending declines on the Vegas Strip and restrictions on visas in Macau have stemmed the flow of cash into Las Vegas Sands. Today's admission comes after Adelson, who holds a stake of more than 64%, invested an additional $475 million in September and hired an investment bank to raise more capital with his help.

Some analysts make the point that today’s filing shouldn’t be a shock to Wall Street. Las Vegas Sands shares fell as low as $4.95 last month as debt concerns mounted. The stock then rallied back to $14.19 by Oct. 31 as some investors moved back in.

But on another awful day on Wall Street, no one wants to hear a company warn that a trip to bankruptcy court is possible, even if the warning is boilerplate.

Las Vegas Sands was down $3.84, or 33%, to $7.82 at about 10:50 a.m. PST, after falling as low as $6.52 earlier. The stock peaked at $144.56 in October 2007.

Photo: Sheldon Adelson. Credit: Kin Cheung / Associated Press