p16-18 Macau 27/11/08 08:37 Page 16
MACAU BUSINESS
don't have the pressure of having to raise lots 1, 2 and 3, given to
financing from the market for the next one or Venetian Cotai S.A. by
two years. We can deliver The Oceanus project the government.
with our own resources,'' So added. According to the new
The SJM director even found time for a little version of the
irony, saying: "Luckily for SJM we don't have too concession, Venetian
much land in Cotai as you know, like the others". now has four separate
.macaustockphoto.com
lots of horizontal
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Shipwrecked ownership instead of
just a single block. The
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Waiting for better days, Macau Studio City intention is clear: to
seems to be "shipwrecked", with a deserted allow "the
parcel of land and only a few of its foundations autonomization", as a
showing, while Galaxy's two new units are fraction, of each of the
advancing slowly. The latter's hotel on the Cotai blocks destined for its
Strip, which was previously expected to open own use – hotel,
this year, will fail to meet that deadline and the aparthotel, mall and
second tower, home to the Okura Hotel and parking silo. With these two alternatives, LVS seeks to gain
Banyan Tree, may not open when completed. The document explains that this allows the points in a battle that promises complexities, at
As far as Macau Business was able to gather, concessionaires to offer the different blocks as a time when LVS is in the market to procure
shareholders have been told the company is on guaranties, "specifically to mortgage the US$2.5 billion in financing to complete
a new timetable and which effectively puts blocks". The transition to horizontal ownership funding for its projects.
developments on hold. One thing is certain, the allows for fractional mortgaging. Otherwise, as Adelson, who recently invested $475 million
next phases are "frozen for the time being". initially determined, the mortgage would affect of his own money in the company to keep it
From the government's point of view, all the entire property. from breaching a loan covenant, has said LVS
these delays and project slowdowns may not be Within this same strategy of alleviating any had been seeking funds from Asian banks
a problem. doubts and of guaranteeing the much sought- which haven't been hit as hard as those in the
The government understands the difficulties after banking finance, the Venetian has also US by the credit crisis.
that some concessionaires are facing and that announced other options to raise cash, such as
some of those problems are due to external selling non-core assets like retail space and Eyes bigger than their
factors. But they may not be in such a vacation suites. stomachs?
benevolent mood when faced with a growing In an interview with Macau Business, Stephen
lobby for a cut in gaming taxes. Weaver, LVS Corp. Asian Region President, Ambrose So doesn't pull his punches when
The operators are adamant that could be a guaranteed that both options "were always part asked about LVS's strategy: "People thought
way out of the current crisis. But one analyst told of our strategy". Regarding the retail space at that the free traveling scheme would
Macau Business that, politically, the scenario The Venetian and Four Seasons, the possibility increase forever and that casino's operations
would be hard for Edmund Ho to manage, of its sale was merely announced. in Macau would expand forever. So a lot of
considering he has been criticized for giving too "We just wanted to say what could be done,'' players were expanding big and offering a lot
much to the gaming operators, especially when it explained Weaver. "We don't need to own the of products to the market not realising that
comes to the vast areas of land sold at "sale malls forever, we are developers,'' he added. A there is a cycle.
prices", to quote legislator Au Kam San. similar situation occurred in Las Vegas, where "With the restriction of free traveling scheme
the company sold its Grand Canal Shops in a and the economic crisis, people were caught off
Spotlight on LVS multi-billion deal. Just one more enticing factor guard. I would say that for those people who
to assure financiers. have expanded too much, who leverage too
The focus at present is very much on Las The same may happen with the famous much, they will have a difficult time ahead
Vegas Sands (LVS), with its shares plunging 95 aparthotels, which have generated some because now we are talking about the
per cent in the space of 12 months and with distrust in Macau, despite the fact that they leveraging and you can't leverage a lot. Besides,
billions of dollars in debt giving the company a were part of the concession contracts since the if you have a big debt to equity ratio that's a
poor market capitalisation, has sent cold beginning. The solution here will not be to sell serious problem,'' said So.
shivers down investors' spines. them – since the government won't allow it – On the other hand, Steve Wynn, who was
However, just after the meetings with Ho and but, for example, to sell shares in an criticized in Macau for slowing down his pace
Tam, Adelson's company announced that the anonymous entity. of investment when the first visa restriction was
Macau Government had approved the legal In other words, instead of real estate introduced is collecting his bet.
separation of the company's Four Seasons ownership rights, investors will be entitled to a "If the government wanted to slow things
apartment hotel tower on the Cotai Strip from bond ownership right. Since they won't actually down on the speed of the development, then it
the other components of its Four Seasons parcel. own the apartments, investors won't be able to seemed like they were sending a message to us.
The measure allows LVS to shift the sell them, but they'll be able to sell the shares So we followed the government's lead and said,
apartment hotel building into a separate that entitle their owners to use the ultra- ok, when the government thinks it's appropriate
cooperative holding company and to sell luxurious apartments managed by Four Seasons. for us to get more aggressive they will let us
cooperative interests in the tower. If the agreement allows it, they may also be know. We are trying to learn how to listen in
A week later, on October 29, the official eligible for financial compensation in exchange China," he explained to Macau Business with a
gazette published the concession revision of for allowing a third party to use the apartment. barely-hidden smile on his lips.
18 DECEMBER 2008
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