Market Deals Different Hands For Casino Rivals Big Bets Andrew Farrell - Forbes - 14th November 2008

Big Bets

Steve Wynn and Sheldon Adelson try to find financing in lean times.

Casino billionaires and long-time rivals Steve Wynn and Sheldon Adelson both want to raise cash during these lean times. One is having a much easier time.

Wynn's Wynn Resorts (nasdaq:WYNN - news - people ) announced Thursday it will sell 8 million shares in a public offering at $43.50. The deal, if it comes off as planned, would raise $348 million before fees for the gaming company.

"Cash is the most important thing at this point," says James Hardiman, an analyst at FTN Midwest Securities. "Wynn Resorts is already at a better position than their peers with a good chunk of cash on their balance sheets, and this offering will extend their lead." (See"The Casino Billionaires.")

Hardiman says Wynn's more conservative approach to expansion kept them less leveraged than some competitors. The company's relatively strong balance sheet is hugely valuable during this rough period for gaming operators. Gamblers are visiting casinos less and are wagering less.

Adelson's Las Vegas Sands (nyse: LVS - news - people ) doesn't enjoy the same financial security. While Sands hopes to raise $2.1 billion in its own stock offering, it may find buyers scarce. Shares are down 95% so far this year. Morningstar analyst Sumit Desai says the company's financing difficulties "very possibly could force the company into bankruptcy."

Adelson and Wynn's relationship is long and icy. Adelson complained eruptions from the fake volcano at Wynn's Mirage hotel and casino were too loud. Wynn countered that Adelson didn't build enough parking at his Las Vegas projects and the overflow grabbed spaces from his own customers. Wynn said Adelson has an "inferiority complex" and Adelson called Wynn an "egomaniac."

Adelson doesn't have time for quips now though. The Las Vegas Sands auditor warned last week that the company could breach some agreements with its lenders. Sands admitted in a regulatory filing that a default on its loans would raise serious doubts about its ability to operate. (See "The House Always Wins.")

The company is scrambling to right itself. Sands might lay off about 11,000 workers at its China operations and temporarily halted two of its massive construction projects in the country.

Tightened lending is compounding the Nevada-based company's financing woes. "We would not have suspended" construction, said Stephen Weaver, Sands' Asia president, "if we could see clarity on how long it would take to raise the funds."

Greg Tingle comment...

Potential investors, backers and the like are going to obviously do a risk assessment on both Steve Wynn and Sheldon Adelson. In addition, the (real books) and balance sheets, and, who they are in bed with already. Also, don't forget that Donald Trump is also doing a consortium deal in The Philippines, and Australia's James Packer has his Crown Macau - City of Dreams, and Packer has enjoyed some considerable success in the casino and gaming sector, despite some leaner times lately. Packer got out of CVC - Network Nine Australia and this did free up some cash, and cash is very attractive in the current market. You can bet that the casinos will be wanting to get on or stay on the good side of the tourism and gaming regulators and boards, and a sweet airline deal or two to swing in the masses and whales on some sort of dream casino travel package won't go astray. And, finally, the right PR and news headlines, both mainstream news media and casino press, as backers, investors and Joe Public read this stuff, and perceptions become reality.

(Credit: Forbes)

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