Source : Straits Times - 12 Nov 2008
Tourism board says Singapore has several options should project go wrong
EMBATTLED casino operator Las Vegas Sands (LVS) said yesterday it was going ahead with plans for the Marina Bay integrated resort, but will suspend projects in Macau and the United States.
It said the multibillion-dollar resort and casino project will open partially at the end of next year.
Calling it ‘probably the most important project’ in the LVS portfolio, Sands president and chief operating officer William Weidner said the Marina Bay project offered ‘terrific returns on investment’.
He was speaking during an earnings conference call from the US yesterday.
Despite the LVS pledge, the Singapore Tourism Board (STB) said last night that should things go wrong, there were a number of options available under the terms of its agreement with Marina Bay Sands.
Responding to queries, a board spokesman said that if the project faced financial difficulties to such an extent that it was wound up or a receiver was appointed over its assets, the STB could 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’.
On its part, LVS was upbeat about its prospects and Marina Bay yesterday.
It said it had secured US$2.14 billion (S$3.22 billion) in capital-funding commitments, a move analysts said was reassuring to investors who had earlier feared LVS was doomed to go under.
Sands’ billionaire chief executive Sheldon Adelson also reiterated his commitment to the Singapore project yesterday.
He said: ‘As part of my visit to Singapore last week, I assured the Government we were very committed to the success of Marina Bay Sands and would have the funding necessary to complete this development.
‘That is exactly where we stand today.’
But LVS admitted yesterday that it will not be able to open the entire integrated resort at the end of next year after all.
First to open will be two out of three hotel towers, a portion of the shopping mall, most of the convention space and the casino, said LVS executive vice-president Bradley Stone. Other facilities, including an iconic sky park, will open in early 2010.
He said the project was among the company’s crown jewels given the low tax rates, high number of days visitors are projected to stay, and the benefit of operating with only one competitor - the Resorts World Sentosa complex.
Marina Bay Sands, with 1,000 gaming tables, is expected to turn an annual operating profit of US$1.26 billion by 2012.
LVS posted a worse-than-expected net loss of US$32.2 million, or 9 cents a share, for the third quarter. In the same period last year, it posted a loss of US$48.5 million, or 14 cents a share.
Mr Adelson said the news that it has secured capital-funding commitments should put to rest talk that the company is in danger of going belly-up.
But LVS is not out of the woods yet.
Its decision to suspend construction of its Macau development at the Cotai Strip was taken to conserve cash and avoid violating terms of some American loans that could set off a series of defaults.
Similarly, suspending work on its luxury St Regis condominium in Las Vegas and focusing solely on casino components at its Bethlehem, Pennsylvania, project will save an estimated US$1.8 billion.
Mr Weidner said the current capital market conditions will not have an impact on the Singapore development since the S$5.44 billion credit facility had been secured earlier in the year.
To date, he said, the company has invested US$1.81 billion in construction costs, including land price, in the Marina Bay project, of which an approximate US$616 million was in equity.
The current estimated cost of completing the project is about US$2.7 billion.
Separately yesterday, Macau chief executive Edmund Ho said his government would take over any casino that goes bankrupt there, Bloomberg reported.
Seeking to allay fears as Macau’s crucial gaming sector stutters, he said: ‘Our policy is that we will not allow any casinos to just shut down and cease operations.’
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