Sands puts Marina Bay project first

LAS Vegas Sands is to halt work on developments in Macau, where it earns two-thirds of its revenue, to focus on the US$4-billion ($6-billion) integrated resort project at Marina Bay, executives said.

The casinos and resorts company run by billionaire Sheldon Adelson said it is managing to raise a further US$2.14 billion in capital following a third-quarter loss.

The United States-based company expects to finish the “oversubscribed” sale of debt or equity this week, including contributions from the Adelson family. This would remove the risk of the parent company breaking its loan covenants, the executives said. Mr Adelson said “a major Chinese bank” may lend the company as much as US$700 million to resume work in Macau.

Las Vegas Sands needs the cash to avoid violating the terms of some US loans and setting off a series of defaults that could force it into bankruptcy.

The company has extended the deadline for finishing parts of Marina Bay Sands into 2010, although the casino, two hotel towers, parts of the mall as well as meeting and convention areas are to open as scheduled by the end of next year, it says.

Design changes will allow the Singapore casino to house as many as 1,000 gambling tables, up from the 600 or so earlier planned, Las Vegas Sands said. It says it expects the Marina Bay project to deliver earnings before interest, taxes, depreciation, amortisation and rent of US$1.26 billion in 2012.

Meanwhile in Las Vegas, where Sands owns the Venetian and Palazzo casino resorts, gambling revenue on the famous Strip has declined for eight straight months. In response, as well as cutting back in Macau, Sands is also to stop work on its Las Vegas condominiums and parts of a casino project in Bethlehem, Pennsylvania.

The company will issue a prospectus relating to the new fundraising “within days,” executives said, while avoiding saying whether the new money was in the form of debt or equity.

Shares in Las Vegas Sands fell 6.3 per cent to US$7.50 after the close of New York Stock Exchange composite trading on Monday.

The company has lost 92 per cent of market value this year on investor concerns that falling casino revenue and the global financial meltdown will leave it without enough cash to pay for expansion projects or cover its loans. It was usurped as the world’s largest casino company by market value in the past month. Wynn Resorts is now the biggest, followed by MGM Mirage.

Mr Adelson’s company posted a third-quarter loss of US$32.2 million.

The company made a filing with regulators on Nov. 6 to allow it to quickly sell stocks or bonds if it finds investors. Mr Adelson, who owns about two-thirds of Las Vegas Sands, injected US$475 million on Sept. 30, and hired Goldman Sachs to help raise more capital.

Las Vegas Sands earlier pledged to invest at least US$12 billion building casinos in Macau, where casino gambling revenue has more than doubled since 2004 to 83 billion patacas (s$15.7 billion) last year.

Casino gambling revenue in Macau fell 26 billion patacas in the third quarter, 10 per cent lower than the previous three-month period, amid the economic slowdown caused by the credit crisis and measures by the Chinese government to restrict its citizens’ travel to the city.

The city had had 2.31 million visitors in September, 10 per cent less than the previous month and the lowest number since July 2007.

Still, compared with the third quarter last year, Macau’s casino revenue grew 28 per cent.

Source : Today – 12 Nov 2008

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