Thursday, November 13, 2008

Govt Won't Bail Out IR If It Goes Bust

Source : The Straits Times, Nov 13, 2008

Marina project stays with Las Vegas Sands, but questions still linger

THE Government yesterday made clear it will not bail out the Marina Bay Sands resort should its cash-strapped parent, casino operator Las Vegas Sands, go bust.

News of extra capital and the company's commitment to complete the Marina Bay project was welcomed as an 'important assurance' by Mr Iswaran. -- ST PHOTO: WANG HUI FEN

Putting an end to speculation about a Government-backed rescue, Senior Minister of State for Trade and Industry S. Iswaran said yesterday: 'There was no request for a Government bailout for Marina Bay Sands and neither does the Government intend to do one.

'I think it has always been a commercial project and the solutions to the challenges posed by the current economic environment and financial market situation really lie in the commercial sector as well.'

Asked if there could be a role for a Government-linked company, he said these were commercial enterprises and would have to make their own decisions on whether an investment makes sense.

'It's not for the Government to tell them what to do,' he said.

On Tuesday, the casino operator said it had secured US$2.14 billion (S$3.22 billion) in capital-funding commitments.

Billionaire chief executive officer Sheldon Adelson declared the Singapore project the company's 'No. 1 priority', as it was suspending construction of projects in Macau and Las Vegas.

News of extra capital and the company's commitment to complete the Marina Bay project was welcomed as an 'important assurance' by Mr Iswaran, who spoke to reporters while attending an industry event.

But questions linger over the project's timeline and when the integrated resort (IR) will open.

Mr Bradley Stone, Las Vegas Sands' executive vice-president, said on Tuesday that the casino, two of the three hotel towers, most of the convention space and a portion of the retail mall will open by the end of next year.

Other facilities will open in early 2010. The original plan was to open the whole complex at the same time next year.

Ms Iswaran said Las Vegas Sands had asked to modify the timeline, but so far, the Singapore Tourism Board (STB) 'has not agreed to any of these variations'.

The project details, including possible penalties for delays, are laid out in a development agreement signed by Sands and the STB.

The STB said on Tuesday that it had various options under the agreement, the ultimate being the right to 'step in and resume possession of the land, the IR and any other structure on the land, and deal with them as STB sees fit' should the project be wound up or if a receiver is appointed over its assets.

Asked about the possibility of imposing penalties for delays, Mr Iswaran said yesterday: 'I think we need to look at what actually are the specific proposals and requests before we make some decisions on that.'

Knight Frank's director of consultancy and research, Mr Nicholas Mak, said the clause allowing the Government to step in and take over the land and whatever is on it should the project fail is not unusual.

It allows the Government to prevent the project from stalling and becoming an eyesore in the prime Marina Bay district.

On the issue of the 10,000 jobs promised by the IR, Mr Iswaran said that while hiring may be delayed, there is no reason to believe the jobs would not materialise.

Sands has also given an assurance that the number of employees needed 'has not changed by one person'.

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