Singapore government will not bail out Las Vegas Sands

Source : Business Times - 12 Nov 2008

The Singapore government said Wednesday it will not bail out the troubled US gaming firm Las Vegas Sands should it fail to fund the Marina Bay integrated resort.
Senior Minister of State for Trade and Industry S Iswaran, speaking on the sidelines of an industry conference, said there has been no request from Sands for a bailout so far.
Sands has been working to avoid defaulting on bank covenants and announced on Tuesday that it was raising some US$2 billion in capital.
There have been concerns about whether Sands has the financial ability to finish the resort at Marina Bay, after it ran into financial difficulties.
Las Vegas Sands won the bid two years ago to build the Marina Bay integrated resort, one of Singapore’s tourist magnets. The S$5.4 billion project, to be ready next year, is a commercial one from the start. That’s why Singapore authorities will not bail it out should it fail.
There has been speculation, though, that government-linked companies may be interested. But Mr Iswaran made it clear that it is something for the companies themselves to decide.
“Government-linked companies are commercial enterprises. They have to make their own decisions on whether an investment makes sense for them or not. It’s not for the government to tell them what to do,” he said.
For now, construction work continues at the integrated resort. Sands says it has the money to see the project through, after raising over US$2 billion in capital.
“This fund-raising that Sands has done is an example of what they need to do in this environment in order to strengthen their balance sheet and be able to fund the relevant project. They have to do some prioritisation and that is what I think they are doing and that is the right thing,” said Mr Iswaran.
On the jobs front, Mr Iswaran said Marina Bay Sands has already started recruitment and there is no reason to think that a substantive portion of those jobs will be lost. However, some of them could be deferred due to delays in some elements of the project.
Mr Iswaran revealed that Sands has asked the Singapore Tourism Board to adjust the time-line for the construction of the resort. The request is being reviewed.
The government and Sands have a development agreement which sets out clear rights for both parties, including penalties for delays. But Mr Iswaran said the government will monitor the situation closely before deciding on exercising those rights.