Most of Macau resort to open by 2011

Source : Business Times – 16 Nov 2009

Las Vegas Sands Corp, the casino company controlled by billionaire Sheldon Adelson, will open most of its stalled resort in Macau by December 2011 after raising enough funds to restart construction, chief operating officer Michael Leven said yesterday.

The project is a ‘quantum leap for Macau’ as Las Vegas Sands bets that more convention space, hotel rooms and shopping malls will entice visitors to prolong their stay in the world’s biggest gambling hub, Mr Leven told reporters in a videoconference from Las Vegas.

Las Vegas Sands is selling a stake in its Macau unit for as much as HK$26 billion (S$4.65 billion) in a Hong Kong initial public offering, in what could be the city’s second-biggest this year.

The offer, together with a separate US$1.75 billion in bank financing, would help the Macau subsidiary, Sands China Ltd, resume building the 13.3-million-square-foot resort. The project and its flagship Venetian Macao would strengthen the challenge Sands China poses to billionaire Stanley Ho in the only Chinese region where casinos are legal.

Sands joins rival Wynn Macau Ltd in selling shares in Hong Kong after other locally traded casino operators surged this year. Sands China’s shares, priced between HK$10.38 and HK$13.88 each, values the company at 16.6 times next year’s estimated earnings before interest, tax, depreciation and amortisation, according to three people familiar with the matter.

Las Vegas Sands has gained 193 per cent in market value this year, after dropping 94 per cent in 2008. The stock rose 2.2 per cent to US$17.39 on Nov 13.

Wynn’s sale valued it at 14.5 times on the same basis, according to banks involved in the sale. Its shares have fallen 3.9 per cent since they debut on Oct 9.

Sands China could restart construction on the sites known as parcels 5 and 6 on the Cotai Strip in Macau as early as January, Steve Jacobs, chief executive of Sands China, said in an earlier briefing. Mr Adelson stopped construction on the two-thirds-built structures last year as credit markets froze, revenue growth slowed and the risk of loan defaults swelled.

Sands China, which has the second-biggest market share in Macau, will hire as many as 13,000 workers to finish the construction, Mr Leven said.

The company will open the second part of the project by December 2011, Mr Leven said. The phase, consisting of one of two Sheraton-branded hotel towers and some retail centres, will add to the 3,700 hotel rooms and a casino with 670 tables which would open in June 2011.

Sands hopes to generate 30 per cent of its Macau revenues from non-Chinese customers after 2011 when it completes the two stalled projects in the territory, Mr Jacobs said.

The company also expects core profits from its Macau business to grow by 15 per cent to US$803 million in 2009, from US$696 million in 2008, Mr Jacobs said.

Investors haven’t expressed concern about China’s travel restrictions on its citizens to Macau that were put in place in October, Mr Jacobs said yesterday.

‘The feedback from investors is not one of concern’ because of the ’sheer size’ of the Chinese market and recognition that the individual travel scheme is ‘an effective way to govern’ Macau’s growth, he said.