Inside Asian Gaming

INSIDE ASIAN GAMING | December 2009 44 Briefs Regional Briefs ‘Talks’ on SJM Industry sources suggest representatives from Texas- based TPG Capital, one of the world’s largest private equity firms, have been in Hong Kong for discussions with Dr Stanley Ho’s Macau casino operation company, Hong Kong-listed SJM Holdings Ltd. TPG Capital is the joint owner, along with fellow PE firm Apollo Management, of the US casino operator Harrah’s. The two companies bought out Harrah’s in a 2006 deal reported at US$27.4 billion—a sum that included the operator’s debt burden. TPG—formerly Texas Pacific Group—is known in the financial sector as a specialist in leveraged buyouts. It’s not clear at this stage what any talks with SJM would achieve. One option might be for TPG to offer to take a minority stake in SJM. Sources say it is unlikely TPG would be seeking majority control of SJM. That is because of the amount of capital likely to be required, even on a leveraged basis, for any majority buy out. Pre-credit crisis in 2008, Forbes estimated Dr Ho’s stake in SJM to be worth US$8 billion. Another reason is potential political hurdles. Both the Macau government and the central government in Beijing are thought to favour the status quo in terms of the number of foreign owned operators in the Macau casino market. Inside Asian Gaming approached a public relations company representing TPG Capital for a comment on the report of talks with SJM, but at the time of going to press, no comment was available. Macau heats up again Macau casino revenue jumped 59% to 12 billion patacas (US$1.55 billion) in November from the equivalent period a year earlier, according to analyst reports citing Portuguese news agency Lusa . It led to a jump in share prices for Macau casino companies listed in Hong Kong, ranging from 3.9% for Melco International Development, a joint venture partner with Australia’s Crown Ltd, to 7.3% for Wynn Macau. Sands China saw a 5% hike, while SJM, Dr Stanley Ho’s casino operations company, advanced by 5.1%, reaching a three-week high of HK$4.35 on the news. Galaxy Entertainment Group rose 5.9%. Moving Sands The equity market volatility created as the legacy from last year’s global credit crisis was still in evidence recently when the price of shares in Sands China yo-yoed violently in the space of a few days following the unit’s late November flotation in Hong Kong. The stock in the Las Vegas Sands Corp local unit, launched at an offer price of HK$10.38, took a 10.2% dip on the first day of trading. Ten days later it bounced back 5% to reach HK$10.02 on news of a 59% year on year rise in Macau’s November gross gaming revenue. That meant a net loss over the period of 3.5%. Neither market movement looks especially rational, suggesting investor confidence is generally still fragile and that the market continues to be easily spooked. Some analysts insist Sands China was aggressively priced in relation to its underlying debt burden. Others suggest general nervousness about real estate in emerging markets linked to the debt scheduling troubles of Dubai World may have contributed to the Sands China fluctuation. “We are not in business for ten minutes, we are in business for decades,” LVS Chairman and Chief Executive Sheldon Adelson told journalists in Hong Kong at the time of the IPO launch. LVS is expected to restart its work on Cotai plots five and six in Macau in the New Year with some of the proceeds from its recent debt and equity raising drive, which netted US$5 billion. That included US$2.5 billion from the local IPO and US$600 million from pre-IPO financing. Construction of the 13.3 million square foot Cotai complex— which the company says is 65% complete—was halted a year ago when LVS came under heavy pressure on its debt repayment schedule. LVS said development would be finished in phases. Phase one is expected to open in June 2011 with 3,700 hotel rooms and suites under the Shangri-La, Traders and Sheraton hotel brands. The second phase, planned for December 2011, will house a 2,300-room Sheraton hotel tower. Timing for completion of a third phase, to include a St. Regis hotel and serviced apartments, has yet to be announced. Auction thriller A rhinestone-studded glove once worn by the late pop star Michael Jackson is set to go on display in a Macau gaming resort after selling at auction for more than US$350,000. The glove, worn by Mr Jackson when he first performed his Moonwalk dance in 1983, was bought by Hoffman Ma in New York. Mr Ma made the purchase on behalf of Ponte 16, the casino Grand Lisboa, SJM’s flagship property Sands China’s Grand Canal Shoppes at The Venetian Macao