Inside Asian Gaming

27 business in Asia. “Our plan has three basic components, where our objectives are to first maximise cash flow from our current operating properties in Las Vegas and Macau,” said Mr Weidner. “Second, [it’s] to deliver our two ongoing developments, Marina Bay Sands in Singapore, and Sands Bethlehem in Bethlehem, Pennsylvania, on time and on budget. And third, [it’s] to generate liquidity in the sale of non-core assets,” continued Mr Weidner. “We have made progress on each of these components of our plan since its adoption. We are focused on executing it in spite of the challenging economic conditions in which we all operate.” Operational savings Mr Weidner said US$250 million in cost savings had been identified so far across the global operation—half of it, some $125 million, from the Macau operation. On the issue of the sale of non-core assets, MrWeidner stressed to analysts that 75% of all cash raised by monetisation of the company’s assets in Macau will be ploughed back into the Macau operation. “If we sell assets inMacau, depending upon the category of assets, 75% of those [monies] go to pay down Macau debt,” he explained. The remaining 25% would go to strengthen LVS’s general balance sheet. This would ultimately benefit the Macau operation by improving LVS’s gearing globally, he stressed. Mr Weidner’s assurances follow local media reports that a group calling itself ‘The Concerned Residents Group’ has been petitioning Macau Chief Executive Edmund Ho to review the government’s agreements with LVS. This was because of what the group said was a discriminatory decision to suspend work on Cotai while pressing ahead with completion of the Marina Bay Sands resort in Singapore. Mr Weidner strongly denied the claims at the time and continues to do so. “All our earnings in Macau have stayed in Macau and were matched five times over by additional investments in Macau,” Mr Weidner said at the time. Careful handling Nonetheless, the fact that the Macau operation accounted for 82.1% of LVS’s global gaming revenues in Q4 ’08 (compared to 85.7% inQ4 ’07) does make the suspension of work on Cotai a sensitive issue. This is particularly the case since Mr Weidner went on record recently at an investors’ conference in the United States pointing out that Singapore’s lower gaming tax rate (15% on mass market games and 5% on premium play) meant the company’s net earnings per dollar would be higher in Singapore. In Macau, there is an across the board rate of 35% on the gaming gross plus social and welfare payments, bringing the tax burden close to 40%. There is little likelihood that this will be reviewed before Edmund Ho’s termof office ends in December 2009, and a new, as yet unnamed Chief Executive is appointed. On the specifics of the sale of non-core assets in Macau, Stephen Weaver, President, Asia, for LVS, said the company had been talking to “interested parties” from Korea and Japan about the possible sale of real estate in the Four Seasons complex. “We know that success of these efforts [monetisation] is an important driver of liquidity and will enable us to execute on our de- leveraging strategy,” explained Mr Weaver. “To that end, we will shortly be marketing shares in a cooperative structure that will provide the holders of the shares the exclusive use