Casino Boss Turns Tables His Way

Source : The Business Times, November 8, 2008

Under-fire Marina Bay IR can increase gaming tables while its boss says project remains on track

A SHADOW may have been cast over the prospects of the Marina Bay Sands (MBS) but Las Vegas Sands (LVS) chairman Sheldon Adelson still expects to open on time, and with possibly even more gaming tables than its mega casino at the Venetian Macao.

In response to reports that LVS could be on the brink of bankruptcy, Mr Adelson, who was till recently labelled one of the world's richest men with an estimated net worth of US$11 billion, said: 'In light of recent turmoil in the global markets, I felt the need to personally reaffirm our commitment to the success of Marina Bay Sands.'

Mr Sheldon said he had met with Singapore government officials, covering a range of subjects, such as the pace of construction and marketing efforts with the Singapore Tourism Board (STB). But he did not comment on reports that MBS was seeking financial assistance from the Singapore government.

STB assistant chief executive (leisure) and director (integrated resorts) Margaret Teo added: 'We remain in dialogue with Marina Bay Sands and will continue to work closely with them to facilitate the completion of the integrated resort project.'

The government appears to have made some concessions to MBS already. Mr Adelson said the Casino Regulatory Authority of Singapore (CRA) had accepted the layout for the casino floor plan which will in essence allow for more gaming tables. He added: 'The acceptance of our proposed casino layout by the Casino Regulatory Authority gives us the flexibility to increase our original table count of 600 to as much as 1,000 to meet demand. This represents a significant milestone as we move aggressively towards our opening.'

CRA head of communications Cheryl Foo confirmed that the proposed number of tables, which was submitted in August, had been accepted and 'comply with our requirements'.

The casino floor plan is still subject to final approval from CRA when the company applies for a casino license next year. Perhaps more significant is that if MBS does eventually provide 1,000 gaming tables, it will more than rival the Venetian Macao casino, dubbed the world's largest casino with 750 gaming tables.

A shift in focus would be interesting.

Jonathan Galaviz, a partner at Globalysis, a Nevada-based travel and leisure sector strategy consultancy, notes that the outbound visa restrictions placed on mainland Chinese tourists to Macau, 'continues to put unnatural pressure on the Asia- based industry'.

He added: 'The integrated resort (IR) site at Marina Bay has always been seen by the industry as a strong real estate position for the building of a multi-billion-dollar mixed-use tourism facility.'

LVS has said it is working to implement a capital raising programme but in a filing to the New York Stock Exchange on Thursday, it added: 'If the capital raising programme is unsuccessful and the company does not have access to the available borrowings under the US senior secured credit facility, the company would need to immediately suspend portions, if not all, of its ongoing global development projects and consider other alternatives.'

LVS shares fell US$3.81 on Thursday to US$7.85 per share, a decline of 32.68 per cent.

According to a Bloomberg report, it has a long-term debt of US$8.8 billion.

LVS has also said that its Singapore IR is expected to cost in excess of US$4.5 billion while its Cotai Strip developments in Macau, which includes the Venetian Macao, has a price tag of US$12 billion.

LVS added: 'If the lenders were to exercise their right to accelerate the indebtedness outstanding, there can be no assurance that the company would be able to refinance any amounts that may become accelerated under such agreements.'

In Singapore, DBS, UOB and OCBC are said to have an exposure to MBS of around $2.2 billion. DBS CEO Richard Stanley said that, so far, there has been no indication of default and that all equity commitments have been made.

A spokesman for UOB said: 'We are always mindful of concentration risks and are constantly reviewing and rebalancing our portfolio to prevent overexposure to any single project or industry.'

Interestingly, Nomura notes in a recent report that the MBS loans are collateralised on the project itself, with repayment of principal and interest to begin only when construction is completed.

In a report released yesterday, CIMB said: 'If LVS cannot cough up its share of equity, it is likely that the Singapore government will step in.' This could be through a GLC, it added.