Inside Asian Gaming

INSIDE ASIAN GAMING | January 2009 26 Market Outlook its scheduled first phase opening of mid- 2009 will starve the company of much needed new revenue. They say such income is necessary, given that Galaxy’s other Macau gaming assets have underperformed relative to the boom times witnessed in the first eight months of 2008. Galaxy says its decision to delay the opening of the Cotai mega resort and buy back debt is a sign of its commitment to responsible management and determination to control costs and maintain in the medium term the integrity of its capital funding. Galaxy’s original plan had been to open the first phase of its HK$10 billion Cotai resort, including a 1,500-room Galaxy-branded hotel tower, in the third quarter of 2009, followed by a 400-room Okura hotel and a 254-room Banyan Tree hotel by the end of that year. It’s been reported recently that Galaxy still needs to spend HK$7.8 billion (US$1.01 billion) to complete the Cotai IR project. The rescheduledopening spreads that spending over a longer period, in the expectation that revenues from Galaxy’s existing Macau venues can support the balance sheet. Opportunity knocks In early December, Galaxy seized the opportunity presented by a collapse in regional bond prices by announcing a US$180 million offer to buy back some of its fixed and floating rate bonds bearing a face value of US$350 million. This consists of all of its US$250 million guaranteed senior floating rate notes due in 2010 and up to US$100 million of the principal on its US$350 million guaranteed senior fixed rate Perspective of the future GalaxyWorld Resort in Cotai: Will Galaxy Entertainment Group need to suspend construction of its flagship integrated resort because of a possible funding gap?