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UPDATE 1-Las Vegas Sands says to resume Macau project in 2009
April 2, 2009 / 11:30 AM / 9 years ago

UPDATE 1-Las Vegas Sands says to resume Macau project in 2009

* In talks with potential new investors

* Singapore project first phase to open by year-end

* Gambling revenues hit by recession

* (Adds further details, quotes)

By James Pomfret

HONG KONG, April 2 (Reuters) - Las Vegas Sands (LVS.N) said on Thursday it was talking to potential new investors about restarting its half-finished Cotai strip project and aimed to resume construction by year-end.

“We are certainly looking to resume in this calendar year, keeping in mind that when we suspended these works, we were only about nine months off from opening the first phase,” Stephen Weaver, the firm’s Asia President. told reporters.

Weaver gave no details of the investors but said it was not the Macau government.

“We’re in discussions with a number of very credible ... partners,” he said.

The debt-straddled Sands halted casino expansion in Macau late last year and laid off most of the 11,000 people working on the Cotai strip, fashioned after Las Vegas’ famed neon alley.

Since then, Sands has struggled to secure funding of between $1.5 to 2 billion to complete the development, close to its Venetian Macau, the world’s largest casino resort.

Casino operators in China-ruled Macau have been hit hard by the financial crisis, a supply glut and heightened competition amid the gaming boom and visa restrictions on Chinese visitors that have dragged on the market.

Operating income fell 39 percent in the final quarter in 2008 for the Sands Macau casino and dropped 13 percent at the Venetian Macau.

“While the (Macau visitor) numbers continue to grow, the revenues that are generated don’t grow at the same pace ... one would be foolish to think visitors have the same spending power as the recession is affecting everybody’s ability to spend,” said Weaver, when asked of Macau’s prospects amid the slump.

Sands, which has come close to violating loan agreements, is looking to sell non-core assets, including retail malls in Macau.


Regarding its other major Asian project, the $5.4 billion Marina Bay Sands (MBS) in Singapore -- the firm said it was on track to open the first phase by the end of this year and there was little risk of funds drying up like they did in Macau.

“The company has funds available at the parent level which if needed, could be used to complete the project, I think you should rest assured that this would be financed,” said Weaver.

Despite an overall pall of gloom over the global gaming market and the rising risk of bankruptcies, some analysts are bullish on the Singapore project which will have a prime waterfront location and become the first of two mega-casino resorts to open in the city-state.

Janet Brashear of Bernstein Research wrote in a March report that the Singapore casino would be a “significant home run” despite the firm’s heavy debt burden and bank covenants.

“We believe it has the options to escape its liquidity bind and emerge with a stellar portfolio of assets,” Brashear wrote.

The phased opening of the MBS will add an extra 2,600 hotel rooms to the 32,000 currently in Singapore, possibly putting further pressure on hoteliers in the city-state, where visitor arrivals fell 12.9 percent in January from a year ago due to the global economic downturn.

Editing by David Cowell

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