Inside Asian Gaming

January 2009 | INSIDE ASIAN GAMING 33 Operator Outlook wife and family injected a staggering US$1 billion of their own cash into the business in the space of a month from the beginning of the financial world’s own ‘Black September’. Then, inNovember, the company announced it had succeeded in raising a further US$2.1 billion from the sale of extra shares and warrants without the need for pre-approval by existing shareholders. Despite these remedial measures, LVS suspended buildingwork on its newprojects on Cotai, resulting in around 11,000 sub- contracted buildingworkers being laid off. In December, the company announced it was shedding 500 casino workers in Macau—all foreigners and including a number of people at executive level. LVS said many of the managers removed from the Macau payroll would be offered the chance of reassignment to the company’s Singapore resort, the Marina Bay Sands, though that project is also a victim of the financial crisis, experiencing its own bout of ‘phased opening’ syndrome. LVS says it expects to open at least 1,000 hotel rooms and a portion of the casino by the end of 2009, but other key elements such as the convention centre and the shopping mall are unlikely to be fully open to visitors until the first quarter of 2010. Melco Crown Entertainment—steady as she goes Until LVS’s historic announcement that it was mothballing its new Cotai sites, the company’s chairman, Sheldon Adelson, had always been proud to highlight what he said was LVS’s excellent record for executing projects on time. On the face of it, Melco Crown Entertainment (MPEL), the joint venture between Lawrence Ho and James Packer, is sticking to its own timetable for opening its City of Dreams integrated resort on Cotai in the second half of 2009, despite the credit crunch and toughening trading conditions. In practice, the City of Dreams project has already seen some deadline creep, some of it related to funding issues. At the time of the ground breaking ceremony in spring 2006, the JV said it planned to open the resort in “the second half of 2008”. Cost overruns and delays on MPEL’s Crown Macau project were a significant factor in pushing back the City of Dreams timetable. Since then, MPEL has been working to improve its balance sheet and its execution on its Macau projects. In November, Crown Ltd, Mr Packer’s Australian casino unit, which has a 37% stake in MPEL, announced it had negotiated a A$1.6 billion syndicated loan from ten banks. Depending on how one looks at it, this can be seen either as a consolidating measure or a rolling over of existing loans. In any case, it allowed Crown to make an early pay back on debt that had been due in August 2010. Crown’s next major refinancing is now reported to be due in late 2011. In December, a few weeks after the syndicated loan was announced, Crown revealed it had raised a further A$300 million, this time in equity. The company has other spending commitments aside from Macau, namely in Las Vegas and Canada. Nonetheless,thesemeasures,takentogether, are a sign of the determination of Mr Packer and his team to maintain the confidence of analysts and investors at a testing time for the whole world economy. Macao Studio City—2011 and counting? Maintaining investor confidence in ongoing projects is one thing. Getting sufficient backing to move beyond the foundation phase of a project is another. Spare a thought then for Cyber One Agents Ltd, the joint venture behind the US$2.4 billionMacao StudioCity, the entertainment- focused casino resort planned for the northern end of Cotai, near the Lotus Bridge immigration point. At the time IAG went to press, there appeared to be very little activity on the Macao Studio City site. It’s no secret that the global credit crisis has had a negative impact on funding for Macao Studio City and pushed back the projected opening date of phase one of the project to 2011. Richard Hamilton, Vice President, Development for Taubman Asia, which has a 25% stake in the retail portion of Macao Studio City, told IAG recently:“When I started on this project we were talking about 2009. Now we’re talking about 2011. “In some regards it’s frustrating, but in many other ways it’s an opportunity,” he added, suggesting that by the time the project is up, the economy and visa situation for Chinese visitors will probably have improved. SJM—the lotus hoping to blossom in 2009 Before the markets went on holiday for the Christmas break, Dr Stanley Ho went on record as saying the balance sheet of his casino operating company SJM Holdings is solid, despite the global economic turmoil. “We are all aware of the impact that the current economic situation is having on Macau and the gaming industry, but SJM’s strong financial position and our prudent steady growth strategy have left us well placed to weather this storm,” Dr Marina Bay Sands will open in phases from end-2009 City of Dreams is sticking to its 2H ’09 opening schedule Macao Studio City is now expected to open in 2011—two years later than originally planned