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WHAT YOU'RE READINGMost e-mailed business stories from the Review-Journal; based on eRJ dataLAS VEGAS SANDS TELLS INVESTORS IT'S IN DANGER OF DEFAULT The financial health of Las Vegas Sands Corp. took a sudden downturn when the casino operator told investors it was in danger of defaulting on some of its loans, raising the possibility the company could be facing a date in bankruptcy court. Wall Street analysts, however, cautioned that the language in the company's filing with the Securities and Exchange Commission may have been ordered by auditors. Some speculated that Las Vegas Sands will come up with a capital plan to restore the faith of investors.
The company's stock was as high as $148.76 more than a year ago before a more than 90 percent decline. It had returned to double-digit prices in the past week until Thursday. "No doubt, this development is adding to the unprecedented volatility in Las Vegas Sands stock," Susquehanna gaming analyst Robert LaFleur said in a research note. "We expect this volatility will continue until clarity of Las Vegas Sands' financial situation emerges." In its filing, Las Vegas Sands said it was in jeopardy of missing certain financial covenant requirements and needs to raise more capital. -- by Howard Stutz Riviera HOldings cuts expenditures, delays project Riviera Holdings Corp. has cut nearly all capital expenditures for next year and suspended room renovations at its Strip property to help the company weather the general economic crisis, executives said during the company's third-quarter earnings call. Chairman and Chief Executive Officer William Westerman told management that unless the expenditure is needed to keep from having to "shut the doors ... don't waste your time asking for it." Westerman said that despite the tough economic times, the company is well positioned with its banks. Riviera Holdings now has a $225 million bank loan at just under 7.5 percent interest, which doesn't mature until June 2014, and a $20 million revolving credit line. "We're going to do everything to make sure we do not have to go hat-in-hands to the banks to refinance our credits," Westerman said. "We're used to surviving. We've survived 53 years and we have a healthy cash position and we have a very excellent financial package of loans." -- by Arnold M. Knightly HARRAH'S SLASHES COSTS AMID SLOWDOWN Harrah's Entertainment is continuing to cut jobs and capital expenditures as well as costs in corporate, marketing and purchasing to combat a decline in customer spending, company executives said. The world's largest casino company by revenue posted a third-quarter loss due to the gaming slowdown on the Strip, decreased visitor numbers across the company's 50 casinos and the closure of properties in the Gulf Coast because of hurricanes. "To the degree revenues continue to decline, costs will have to continue to come down," company Chairman and Chief Executive Officer Gary Loveman said during a conference call to review the company's earnings. "To the degree we see further erosion of revenue, we'll continue to aggressively respond with cost reduction." Harrah's, which is privately held but has publicly traded debt, reported a net loss of $129.7 million for the quarter ended Sept. 30, compared with net income of $244.4 million in 2007. The company's net loss for the first nine months of 2008 increased to $415.1 million, a swing from net income of $667.2 million the first nine months of 2007. Harrah's will continue to "scrutinize every dollar of capital spending" well into next year to position the company so it can "benefit from the eventual economic rebound." -- by Arnold M. Knightly www.reviewjournal.com |
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