Singapore concern for casino project, by Assif Shameen - Financial Times - 8th November 2008

Sheldon Adelson, Las Vegas Sands chairman, recently met Singapore government officials concerned about completion of the company's resort project in the city-state, according to people familiar with the discussions.

The talks centred on restructuring and refinancing of the Marina Bay Sands, the first of two casino projects currently under construction in Singapore.

Las Vegas Sands is trying to raise more than US$2bn to fund projects in Singapore, Macao and the US. Last month it raised $475m in convertible senior stock notes from Mr Adelson and his family.

In a regulatory filing on Thursday, the casino operators warned that its ability to operate as a going concern could be in doubt if it did not increase earnings or raise more capital. The filing added: "If the company is not able to obtain the requisite financing, or the terms are not as favourable as it anticipates, the company may be required to slow or suspend its global development activities."

Las Vegas Sands has built the world's two largest casinos in Macao, which opened its market to overseas investors in 2002.

Mr Adelson has been the most aggressive entrant into the Chinese special administrative region, the world's biggest gaming market. The company secured a coveted concession in Singapore.

Mr Adelson and other top Las Vegas Sands officials have met bankers in Singapore and Hong Kong in recent weeks to raise new funds. Discussions have included an array of financing instruments including convertible bonds and syndicated loans. A Las Vegas Sands spokesman could not be reached for comment yesterday.

"Marina Bay Sands is a showcase project for the city-state," said Ng Wee Siang, analyst at brokerage Westcomb.

"It is highly likely that the government will step in if financing becomes a problem."

The $4.2bn Marina Bay Sands resort, which will include 2,500 hotel rooms and more than 2m sq ft of convention and retail space, is supposed to open by December 2009. Bankers say Las Vegas Sands needs to raise up to $450m to meet additional funding requirements in Singapore.

Late last year Las Vegas Sands raised S$5.3bn ($3.54bn) through a syndicated loan arranged by Goldman Sachs, Citigroup and Lehman Brothers.

Three local banks - DBS, United Overseas Bank and OCBC - have the biggest exposure to Marina Bay Sands project with a total of S$2.2bn. Shares of the trio have fallen in recent weeks.

"Global financial centres have been major conduits of debt and equity capital to Asia's growing casino industry over the last five years and it appears this conduit is severely restricted due to the global economic situation," said Jonathan Galaviz, an analyst at Las Vegas-based gaming and tourism consultancy Globalysis.

Mr Galaviz expects Marina Bay Sands to open sometime in 2010, but believes it could struggle in the face of a global slowdown, and competition with Macao casinos.

Additional reporting by Justine Lau and Tom Mitchell in Hong Kong

(Credit: Financial Times)

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