Marina
Sands
Casino worries
It's preference is for Plan B on Singapore most
important prohect despite Sands assurance about funding.
WSJ.
Nov 20, 2008
By
Costas Paris
Despite assurances from the developer, Singapore is looking
for ways to avoid ending up with a mammoth unfinished project
on a prominent piece of land if US casino operator Las Vegas
Sands Corp. is unable to complete a US$4.9b gaming venture.
"This
is supposed to be the new revenue source for Singapore,
and we are faced with a situation where the developer and
operator will delay the completion at best or could end
up unable to fulfill the contract. There are alarm bells
all over the place," said a person familiar with the
matter.
Las
Vegas Sands is seeking US$2.1b to complete and open its
Singapore casino project, Marina Bay Sands. The stakes were
underscored on Thursday by Sands officials in Macau.
Stephen
Weaver, Sands's president for Asia, said the company could
lay off about 10,000 workers in China's gambling enclave.
It said
it would temporarily shut down two major construction projects
along Macau's Cotai Strip, including a Shangri-La/Traders
hotel tower, a Sheraton hotel tower and three casinos.
Sands
said in a filing with the US Securities and Exchange Commission
last week that it was in danger of not meeting obligations
to its lenders on a US$3.8b portion of its debt unless it
raises capital, cuts spending on developments or increases
its Las Vegas earnings by year end.
The
company said it would halt or delay projects in Macau and
the US to conserve cash and concentrate on Singapore.
The
gaming operator plans to raise US$2.1b in a stock offering,
with Chairman and Chief Executive Sheldon Adelson personally
pumping US$525m into the share purchase.
The
company said the stock offering - assuming it closes - will
allow it to finish and open the Singapore project as planned.
The
Singapore Tourism Board, which oversees the Marina Bay Sands
Casino development, said on Thursday that it welcomes the
commitment to Singapore.
The
Marina Bay Sands Casino, comprising a casino, hotels, convention,
entertainment and retail facilities, is expected to create
10,000 jobs with an estimated annual operating profit of
US$1.26b by 2012.
Earlier
this week, the tourism board said it had various options
under its agreement with Sands, including to step in "and
resume possession of the land...and any other structure
on the land, and deal with them as STB sees fit" if
the project closes down or if it enters receivership.
Singapore
government officials are making contingency plans if the
financing falls through, said the person familiar with the
matter, who didn't elaborate.
"They
are looking for a plan B if things turn sour. They won't
allow a huge construction hole in downtown Singapore,"
this person said.
Singapore
could be expected to take steps to keep the project alive,
said Song Seng Wun, economist with financial-services firm
CIMB Group.
"The
bottom line here is that if LVS can't finish this, someone
else will," he said.
On Tuesday,
Singapore's senior minister of state for trade and industry,
S. Iswaran, said the government won't bail out the project
if Las Vegas Sands goes bust.
Sands
has secured a US$3.8b loan from about 30 banks for the project.
- Wall Street Journal.
http://online.wsj.com/article/SB122656975936924127.html?mod=residential_real_estate#
