Packer's luck turns as rival Macau project runs aground, by Vanda Carson - The Sydney Morning Herald - 24th November 2008

James Packer's latest joint venture in Macau is set to be the only new casino to open in the enclave next year after its larger US rival was forced to suspend its plans when the financial crisis dried up construction funds.

At last week's global gambling expo in Las Vegas, Melco Crown Entertainment's chief financial officer, Simon Dewhurst, said the $2.1 billion City of Dreams project, to open in the first half of next year, would benefit from the reduced competition.

Las Vegas Sands, which owns the Venetian in Macau, has suspended construction of a further three casinos and two hotels on two sites along Macau's Cotai Strip, adjacent to the City of Dreams Site, which has a 1400-room hotel and 500 gambling tables.

Las Vegas Sands raised $US2.1 billion ($.3 billion) late last week, which has assuaged fears that it would be bankrupted but is unlikely to be enough for the projects to resume construction.

Mr Dewhurst said he believed it would be impossible for Las Vegas Sands to raise the funds needed to finish building its Macau casinos.

Melco Crown was fortunate that it had locked in its development funding before the financial crisis struck.

The company raised $US1.6 billion through its public offering on the Nasdaq last year at between $US16 and $US18 a share. Its shares closed $US17c lower at $US2.65 on Friday.

"Nearly two years ago the dollars were out there for everyone. That's no longer the case," Mr Dewhurst said.

"There's no way those sites [Las Vegas Sands will be] … completed. There are 15 people in the world who do project financing, and in this climate it's impossible to get done."

Melco Crown may yet need to raise more capital, since after City of Dreams reaches its first anniversary $US1.5 billion of loans need to be repaid or refinanced.

A Credit Suisse analyst, Larry Gandler, said a capital raising might need to occur in early 2010.

(Credit: The Sydney Morning Herald)

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