Inside Asian Gaming

INSIDE ASIAN GAMING | January 2008 42 Briefs Regional Briefs Macau Fund Raising Flurries According to Reuters , “a US$1 billion IPO planned by tycoon Stanley Ho’s Macau flagship gives investors a rare chance to bet on a casino boom that has been funded mostly by loans, and more public markets capital-raising is on the cards.” “There’s still probably a handful of US$2 billion or so projects coming, if not more, and that can’t all be digested in the loan mar- ket,”said Chris Gammons,managing director in Citigroup’s financial entrepreneurs group. “I expect to see some of these financings to also come via the debt and equity markets,” he said. Stanley Ho’s Sociedade de Jogos de Macau (SJM), the former monopoly operator whose market share is shrinking at the hands of US heavyweights Las Vegas Sands Corp (LVS) and Wynn Resorts, plans to build up its warchest with a long-expected initial public offering set for February 1, a fund manager said. SJM would join a small handful of listed Macau casino firms that includes Hong Kong-listed Galaxy Entertainment Group Ltd and Nasdaq-listed Melco PBL Entertainment (Macau) Ltd, a venture between Stanley Ho’s son Lawrence’s Hong Kong-listed Melco International Development Ltd and Australia’s Publishing & Broadcasting Ltd. Major Macau projects currently under construction include Melco PBL’s City of Dreams, the GalaxyWorld Resort, and Macao Stu- dio City, which is backed by Hong Kong’s eSun Holdings Ltd. Wynn is building a second resort, Wynn Diamond Suites, and last June doubled the size of a loan facility to US$1.55 billion to fund expan- sion of its existing resort and finance the second property. Citigroup has been among the most active financiers of the Macau boom. It helped arrange two syndicated loans worth a com- bined US$5.8 billion for LVS’ huge Venetian Macao casino resort, and sponsored Melco PBL’s US$1.3 billion IPO and was also part of the firm’s US$1.75 billion loan raised in September. The Melco PBL loan showed that even soaring Macau is not im- mune to the perils of global credit markets. The firm had hoped to raise US$2.75 billion but cut the deal’s size and sweetened its price by 50 basis points, sources told Reuters Basis Point. The volume of syndicated lending from Macau more than dou- bled last year to US$9 billion from six deals, according to Dealogic, but equity volumes from the territory were halved from a year ear- lier to just US$658 million. Bond issuance from Macau has also been scarce, with Galaxy’s US$600 million offer in 2005 the only global public markets issue since Stanley Ho’s 40-year gaming monopoly lapsed in 2002. Macau has also attracted the attention of private equity. In Oc- tober, UK buyout firm Permira paid US$838 million for 20% of Gal- axy, which is building what will be the world’s second-largest casino in Macau. Heavy cash flows give casino operators in Macau funding flex- ibility. LVS expects to recoup its US$2.4 billion investment in the Ve- netian Macao, the world’s biggest casino, within three to five years. In 2004, it paid off a US$120 million five-year loan for its first Macau casino, the Sands, within a year. Wynn Macau Expansion Opens Wynn Macau unveiled an expansion in December, including 85 additional tables and 551 new slot machines, bringing its total to about 390 table games and 1,190 slot machines. The property, which opened in September 2006, also boasts a new rotunda entrance. Meanwhile, a larger retail promenade includ- ing 11 new stores such as Hermes, Gucci and Versace is set to open in January 2008. In addition, Wynn Resorts announced construction had started on a planned Wynn Macau tower called Wynn Diamond Suites. The tower, which will house 400 suites and villas as well as restaurants, retail and gaming space, is estimated to cost up to US$600 million. The project is targeted to open in a little over two years. Wynn’s expansion efforts are not limited to Macau, as the compa- ny plans to open its US$2.2 billion Encore casino-resort next toWynn Las Vegas in early 2009. Wynn Macau won our columnist Octo Chang’s vote for best property in the city, as detailed on Brickbat & Bouquest on page 18 of this issue. Lisboa to Get Torn Down and Rebuilt Macau casino tycoon Stanley Ho’s company Sociedade de Jogos de Macau (SJM) announced that it will tear down and rebuild the landmark Ho- tel Lisboa. According to SJM, the project will com- mence in 2009 and is ex- pected to be completed in 2012. SJM announced it will hold an international architectural design con- test, in a bid to select the best architects for the project. Hotel Lisboa opened in 1970, and is one of Asia’s longest-serving major casino hotels. SJM opened the towering new Grand Lisboa ad- jacent to the old Lisboa in February 2007. LVS Announces Completion of Marina Bay Sands Financing Las Vegas Sands Corp (LVS) announced in early January that it had entered into a credit agreement which provides financing of up