Gaming IPOs in doubt


Wall Street may prove to be a rocky road for casino company IPOs, despite the buzz at this week’s Global Gaming Expo.


Much of the public discussion and corridor buzz at the G2E gathering involved possible initial public offerings by Las Vegas Sands Inc., Coast Casinos and Wynn Resorts.


Market analysts on Wall Street at the end of the week, however, were saying gaming stocks could well get swamped by market trends.


McDonald Investments’ Dennis Forst said the market’s bearish downturn has “nothing to do with gaming. Gaming stocks have done well.


“The question is whether the IPO window is open at all,” he said.


William Weidner, president and chief operating officer of Las Vegas Sands Inc., announced this week during one of the expo’s seminars that The Venetian will consider a “future” public stock offering to fund a new resort adjacent to The Venetian and two casinos in Macau.


Construction is under way on a 1,000-suite addition atop The Venetian’s parking garage and a 150,000-square-foot addition to the resort’s convention center.


Coast Casinos also previously announced plans for a $200 million stock offering, which Chairman Michael Gaughn recently put on hold.


And Wynn Resorts has about a $400 million initial UFA offering in the works as part of the financing package to develop Le Reve, a $1.85 billion megaresort on the Strip Desert Inn site, and casino resorts in Macau.


“It’s difficult to get investor interest in even seasoned companies,” Forst said. “It’s a very difficult market, but it’s not impossible.”


“(Wynn Resorts Chairman Steve) Wynn not starting his road show is an indication (of the difficulties companies face),” he said.


Wall Street insiders expected Wynn Resorts to start an investor presentation “road show” by Labor Day.


“There must be some reason he’s not out and about,” Forst said, referring to Wynn.


Analysts said both the Coast and Sands have “enviable” records, and would probably have little difficulties with public offerings in a more receptive environment.


Larry Klatzkin at Jefferies & Co. said the market’s receptivity would depend more on each individual company’s performance, its cash flow and the multiples at which offerings would be made.


The performance of The Venetian in particular, he said, is very strong and he would not say that Coast Casinos could not complete an offering.


Still, analysts agreed that individual companies and industries can only buck market trends to a limited extent.


This past week, the Dow Jones industrial average closed at 7986.02, down 20.3 percent for the year, and the S&P; 500 Index closed at 845.39, down 26.4 percent for the year.


The IPO market has been hurting all year, impeded by the tumbling stock market, a plethora of corporate-governance and accounting scandals and weak corporate earnings and profit forecasts, analysts said.


Wall Street analysts at G2E, however, were bullish on Las Vegas gaming companies thanks to their resilience in the face of recent market trends.