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We think the Chinese government wants Lots 5 & 6 restarted by the end of 2009. Importantly, Beijing may be "persuading" Chinese lenders to help with financing.

"I'm gonna make him an offer he can't refuse" - Vito Corleone

We think the Chinese government wants Lots 5 & 6 restarted by the end of 2009. Importantly, Beijing may be "persuading" Chinese lenders to help with financing.

The way Beijing sees it, the LVS/Lots 5 & 6 situation can go in three ways:

  • LVS and a developer reach an agreement and Chinese banks provide the financing
  • LVS sells Lots 5 & 6 to a developer and SJM operates the casino
  • LVS hangs in the wind

We think Beijing has already introduced LVS to contractors and Chinese financial institutions to facilitate construction re-starting.  So far, we are hearing that LVS's offering terms are not satisfactory to at least a few contractors.  Other potential developers include Far East Development and New World Development.

Once an agreement is reached, it looks like Beijing may be willing to twist the arms of some banks to provide financing for the project as well as solve LVS's covenant problem.  Our sources tell us that LVS's financing issues are essentially "solved".

Our research continues to indicate that LVS will overcome its financing issues through refinancing, bank debt buybacks, or an IPO.  As we've stated in the past, an IPO likely will not be completed until November at the earliest meaning LVS must deliver on the other options in the meantime.