Source : The Straits Times, Nov 8, 2008
THE top suit behind troubled casino operator Las Vegas Sands met the Singapore authorities this week, and yesterday gave a fresh commitment to completing the Marina Bay integrated resort (IR).
Mr Sheldon Adelson, chairman and chief executive officer of Las Vegas Sands, said: 'In the light of recent turmoil in the global markets, I felt the need to personally reaffirm our commitment to the success of Marina Bay Sands. I am pleased to say that the Singapore Government's support of our project remains strong.'
The statement from Las Vegas Sands did not specify whom Mr Adelson had met.
But the consensus among analysts is that if the project were in trouble, the Government would intervene.
As an assurance that plans were on track, Sands said that it had also received word from the Casino Regulatory Authority of Singapore that it had approved the company's proposed casino floor plan for up to 1,000 gaming tables, instead of the originally planned 600 tables.
That is still subject to final approval.
Sands' reassurances over the future of the Marina IR follows fresh doubts raised by its auditors about the company's ability to continue operating.
In a regulatory filing on Thursday to the United States Securities and Exchange Commission, PricewaterhouseCoopers said the casino operator, which has US$8.8 billion (S$13 billion) in long-term debt at the end of June, would not be able to meet lenders' requirements unless it cuts spending on developments, boosts earnings at its casinos on the Las Vegas strip and raises more capital.
It was also said to be relooking projects under way in Las Vegas, Pennsylvania, Macau and Singapore.
Las Vegas gaming analyst Bill Eadington said the company has lost over 90per cent of its stock value in 13 months. Flying that close to bottom, the very existence of the company is in question, not just one of its developments, he added.
The Singapore authorities have so far declined to say more. When contacted, the Singapore Tourism Board would only refer to its earlier comment that it was 'in talks' to 'facilitate the success' of the development.
Singapore's banks, OCBC, UOB and DBS, which have significant exposure as lead arrangers for the project, remained optimistic.
About half of the $5.4 billion credit facility for Marina Bay Sands has already been drawn upon, according to UOB Kay Hian's latest report.
OCBC chief executive officer David Conner said the loan is 'ring-fenced' with no exposure to the company's projects in Las Vegas or Macau.
The company has to pledge equity before drawing on the loan and, to date, it has met its commitments.
Mr Conner said: 'As far as we are concerned, the project is still under construction.'
DBS CEO Richard Stanley also said there had been 'no default', and 'no indication of default'.
At a news conference on the bank's third-quarter earnings, he said: 'All signals I'm getting from the management of Las Vegas Sands is that they intend to finish the project and move on.
'I have to accept what they say and I have seen in recent days a strong commitment to the project from Las Vegas Sands.' He added that there was no need for loan provisions.
Analysts believe the Government would step in should the company default.
UOB Kay Hian said the banks could seek a new investor, which could 'likely be Temasek or a Temasek-linked company that has previously bidden for sites at Marina Bay or Sentosa'.
Sources say it is likely the Government has approached Temasek Holdings already. But others argued it was too early to act, with the future for Las Vegas Sands still unwritten.
But the talk has already resulted in worries over Temasek Holdings' credit worthiness. Its default protection costs rose on concern that the Government may step in to guarantee completion of the Marina IR, reported Bloomberg.
Five-year credit-default swaps on Temasek, which manages about $130 billion, advanced 15 basis points to 113, JPMorgan Chase & Co data shows.
And is there a white knight waiting in the wings for Las Vegas Sands?
When asked, CapitaLand, which had previously bid for the project, referred to what its chief executive officer Liew Mun Leong said in its third-quarter results.
'With the situation deteriorating rapidly, we are strategically watching the distressed markets, very carefully seeking out opportunities to make the right acquisitions at the right price.'
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