When Chips Are Down.(International Edition; BUSINESS)(corporations on economic crisis)

Byline: George Wehrfritz and Adam B. Kushner; With Sonia Kolesnikov-Jessop in Singapore and Jason Overdorf in New Delhi

Corporate big spenders may have to fold as the credit crisis exposes their debt.

Gaming tycoon Sheldon Adelson's recent gyrations resemble those of Cirque du Soleil, an act he often books in his casinos. Prior to the financial crisis, the CEO of Las Vegas Sands Corp. was flying high, aggressively expanding into Asia. Now, with consumer spending plummeting, what looked savvy has become a bad bet. Last month, Adelson and his wife injected $475 million of their own money into the Sands to meet capital requirements stipulated in loans made for casino development in Macao. Over the past year Adelson's personal

wealth has shrunk by an estimated $16.6 billion while the Sands' share price has tumbled from a peak near $150 to below $6. Bankruptcy has become a real risk.

Adelson isn't the only high flier at risk of falling to earth. Fueled by reckless credit expansion since 2000, the U.S.-centered financial crisis is shifting from crippled banks, brokerages and hedge funds into the real economy, with corporate troubles mounting. Businesses that cranked up leverage during the years of ultracheap credit are confronting repayment woes--sometimes exacerbated by poor risk management--that could well spell their demise. The list includes titans like Ford and General Motors in America, Deutsche Post and telecom Italia in Europe and Hong Kong-listed Citic Pacific Ltd., which recently declared a $2 billion loss from a dubious currency hedge. The common denominator is debt, which a recent report by Westhall Capital in London calls "the new weapon of mass destruction." It warns: "As the credit crisis spills over into the real economy, a wave of corporate bankruptcies looks increasingly likely."

The pain is spread across every geography and sector. Compiling data from Bloomberg, Westhall calculates that two thirds of the largest listed corporations globally now have negative net cash positions, meaning that their operations currently generate less working capital than is required to run them. When loans were cheap and expansion was priority one, this wasn't foreseen as a problem. Today it represents an existential issue, particularly for companies that must soon refinance a significant portion of their debt. The report, entitled "The Good, the Bad and the Dead?" identifies a list of household names (including automakers GM, Ford, Peugeot, Renault, BMW and Hyundai) facing significant debt-rollover challenges. Just as with banks, doubts about the actual net worth of at-risk companies have intensified to become "primarily a problem of solvency," says Westhall's Keith Woolock. "We worry that this could spread."

One category of concern: companies dependant on discretionary spending. That's because retail, tourism and entertainment receipts are down sharply in the industrial economies, and slowing even in emerging markets. Whether its $4 cappuccinos, the new cell phone or the latest handbag, consumers aren't shelling out for it like they did even a few months ago. American doughnut chain Krispy Kreme, for example, abruptly closed most of its outlets in Hong Kong last week due to weak demand for its treats. Elsewhere in Asia, the giant electronics rivals Samsung and Sony both recently announced sharply lower earnings and reduced their growth forecasts for 2009 on slumping demand for their semi-conductors, MP3 players and flat-panel televisions. Richard Reid, a Citibank equities analyst, thinks this blow is landing hardest on high-end brands and retailers, as Wal-Mart and its ilk benefit from a shift toward bargain hunting. "Households seem to be very quick now to trade down to heavy discounters, move away from eating out, and of course use the Internet to compare prices," he says.