Update – Friday October 23, 2009 – LV Sands seeking $2 billion for projects
Las Vegas Sands Corp., the casino company controlled by billionaire Sheldon Adelson, is seeking as much as $2 billion to restart mothballed projects in Macau, Chief Operating Officer Michael Leven said Thursday.
Sands aims to get commitments for project financing from lenders by the end of the month to resume work on lots 5 and 6 of its 21,000-room hotel and casino complex on Macau’s Cotai Strip, Leven said in an interview in New York.
The Las Vegas-based company is willing to contribute additional equity in the project, on top of the $1.6 billion it’s already spent on the four hotels, Leven said, declining to give an amount. He estimated the total cost at about $3.6 billion and said it could be finished by June 2011.
Bloomberg.com reports: Las Vegas Sands Seeks Funding to Revive Macau Casino Expansion
Update – Wednesday, October 21, 2009 – Macau Casino Gambling Revenue Rises To A Record High
Third quarter gambling revenues have been released for Macau and they clearly indicated the importance of Chinese mainland customers to the Macau casinos. Revenue was up almost twenty-five percent compared to the same period the year before.
Earlier this summer, the Chinese government loosened visa restrictions for mainland residents. That allowed the residents to visit Macau more often, which, in turn, led to a huge increase in revenue for the third quarter.
The actual revenue gain was 22.3%. The previous year in the third quarter, revenue was 25.99 billion patacas, compared to the 31.78 billion patacas this year. The revenue growth is expected to continue to rise in the fourth quarter.
Initial Story
The Chinese government aids casinos by reducing travel restrictions, then proposes curtailing expansion and raising age for gaming.
Steve Wynn, in an interview reported by Reuters on Tuesday October 13:
“I’ve got a feeling that the government’s going to tamp it (Cotai) down,” Wynn, the company’s founder and chief executive, said in an interview with Reuters. He was referring to the Cotai Strip, a swathe of land some Macau developers have touted as the next Las Vegas Strip.
“If they limit the amount of (gaming) tables there is no reason to build any more,” he said.
Wynn said Chinese officials appear to be chiefly concerned with the disruption that overbuilding could potentially inflict on workers in Macau. “The government wants to keep everybody calm while they provide jobs and industrialize the country,” he said.
“We are very much in favor of it,” said Wynn, whose company currently operates one luxury casino hotel in Macau and will open a second, called Encore Macau, on April 1.
Wynn said his representative at the meeting suggested that the number of table games for each operator be capped at 1,500, while others proffered a number as low as 1,000. Las Vegas Sands Corp (LVS.N), which operates two Macau properties, already has more than 1,000 table games.
Recent developments:
- Previously, in China Lifts Travel Curbs to Macau Steve Wynn indicated that visa restrictions placed by Beijing on Chinese visitors, their core customers, would be reduced, allowing Guangdong residents to travel to Macau once a month, compared to once every three months previously.
- Wynn Macau Ltd. IPO Shares have Strong Showing on Hong Kong Stock Exchange via a $1.63 billion share sale, ending 6 percent higher, reflecting strong faith in Macau’s prospects. Las Vegas Sands is preparing a $1 billion initial public offering.
- Wynn sells $500 Million in bonds for Aqueduct project and future Macau expansion.
There are currently six casino operators, including U.S. Companies Wynn, Sands and MGM-Mirage who have all invested billions in Macau where they envision a strong growth market, with a huge potential for Chinese visitors and substantial gaming revenue. Macau generated HK$105.6 billion ($13.5 billion) in gross gaming revenues in 2008, more than double the HK$46.7 billion generated by the Las Vegas Strip during the same period.
Macau reported gambling revenue more than doubled in September, and this may have generated the attention of regulators.
Now, perhaps under pressure from critics who believe gaming fosters numerous social ills and addiction, officials are considering limiting expansion and raising the entry age for casinos to 21 years old from 18.
Current operators, especially those planning for expansion, may not be in favor of stopping expansion, but have to consider the silver lining; it actually could prevent new competition from entering the market.
Shares or Las Vegas Sands and Wynn slipped slightly after the announcement and Wynn was upgraded by Fitch Ratings to positive from stable after the completion of the initial public offering of its Macau assets.
Full Story – Reported by Reuters – Macau may Limit Casino Expansions, Shares Fall
