Las Vegas Sands Eyes Macau Big-TimePublished July 4, 2008 by OCR Editor
Hard times on the Las Vegas Strip don't stop Las Vegas Sands from pursuing largest ever loan for a Macau project.
Sheldon Adelson is a person of vision. When the American billionaire businessman looks ahead to the future, and east to China, he sees a 20,000 room hotel and casino complex. A closer look reveals 3,000 table games and 20,000 slot machines.
The project, worth $12 billion, will most likely set Macau as the world's biggest gambling hub for years to come, a title it already holds since overtaking the Las Vegas Strip in 2006.
Financing the deal
Adelson's Las Vegas Sands (LVS) is the world's largest casino company. To finance the project it is reported that it may borrow $7 billion. No deal is yet to be formally announced, but if it goes through it will be its biggest outstanding loan.
It is also said that Las Vegas Sands may replace another loan, of $3.3 billion, to finance the Venetian casino resort project, also in Macau.
Macau is the only region in China where gambling is legal. Analysts expect the supply of gaming tables in Macau to increase by 20 to 30 percent next year. This may serve as justification for the large investment on behalf of Mr. Adelson.
Industry analysts and executives further expect Macau to maintain its revenue growth for an even greater period of three years or even more.
Meanwhile in Las Vegas,Strip casino revenue fell for the fourth straight month in April, according to the Nevada Gaming Control Board.
Fuel costs are only one reason for the decreased revenue, as is the housing slump and the larger economic recession. These factors hurt not only gambling patterns, but conventions as well.
Joseph Greff, an analyst at JP Morgan Securities, warned a week ago of the "magnitude and duration" of the Strip's problems.
LVS market performance
Greff's comments, as in stating that "We expect this summer to be one of the worst on record, with meaningfully discounted room rates and special discounted package deals," have actually affected the Las Vegas Sands stock.
LVS shares fell to the lowest price since January 2006 last week, including a 59% drop in 2008.
Las Vegas Sands' spokesman Ron Reese was quoted saying: "The company does not comment on rumor or speculation."