Don’t be surprised if LVS announces an executive reshuffle quite soon. The most recent of LVS’s routine, but now famous, filings to the US Securities and Exchange Commission referred to ‘a loss of confidence’ among some managers in how the company is run.
It’s unlikely that any of the uppity managers are based in Macau. In China the cultural legacy of Confucianism means that most heads of major companies are treated with a degree of reverence normally reserved in the West for religious leaders. On more than one occasion Asian Gaming Intelligence has seen attendees at press conferences held by Macau’s former gaming monopolist Dr Stanley Ho bow so deeply to the great man that one would have thought he had just turned the event caterer’s mineral water to wine.
It’s a lot easier of course to have confidence in your leaders when things are going well. LVS’s Chairman and (still) controlling shareholder Sheldon Adelson will be mindful of the way the ex-chairman of the US Federal Reserve, Alan Greenspan, has gone from being portrayed as the great sage of Western finance to shockingly complacent under-regulator in a matter of weeks.
Former US President Harry S. Truman famously had a framed sign on his desk saying ‘The Buck Stops Here’. So in whom exactly have the unnamed LVS managers lost confidence?
Evidently not Mr Adelson, as he will be heading a committee at board level to evaluate the company’s decision-making and its way of resolving internal disputes.
At an investor meeting on Monday Mr Weidner gave a fascinating insight into what it was like to be in or around the LVS boardroom during the recent and very public difficulties faced by the business.
When asked about the lead up to the earlier momentous filing with the SEC warning that the viability of the company was in question and asked why LVS didn’t raise the needed capital sooner, Mr Weidner was blunt.
“It was a matter of robust debate within the organisation. There are several of us who have very strong opinions…. It was pretty much a monumental screw-up,” he said.
“I think you can think of it as a junkyard dog fight,” he added.
But he said the infighting was similar to what happens at other companies.
“The board wanted to have more involvement in the process and we welcomed that,” Mr Weidner said.
“We could use more financial brainpower in the process as well.”
The company had been struggling with its significantly leveraged balance sheet for more than a month as part of the fall out from the near collapse of the global credit market seen in the third quarter of this year. In late September Mr Adelson and his wife Dr Miriam Adelson, invested USD475 million in the company to keep it within the terms of existing loan covenants.
Worries about whether LVS would fold have been eased with the raising of the USD2.1 billion in new capital. Its accountants, PricewaterhouseCoopers LLP, improved their view of Sands to ‘going concern,’ based on LVS’ sale of common stock and preferred stock with warrants.
But Mr Weidner hinted that it should have raised the money sooner.
“We had to do what we had to do to put ourselves in a position to survive,” he told the investor forum.
