Macau leader: No plans to help Sands’ financing

Associated Press

Tuesday, Nov. 11, 2008 | 11:33 a.m.

Macau has no plans to help Las Vegas Sands Corp. with financing after the struggling casino operator announced it was suspending multibillion-dollar projects in the Chinese gambling city amid a cash crunch, the territory's leader said Tuesday.

In his annual policy address, Macau Chief Executive Edmund Ho said that the government was aware of Sands' funding difficulties.

"Because of its over-leveraged borrowing in the U.S. and around the world, it's normal and expected that it has to suspend some of its projects," he said.

Asked whether he had any comment on reports that a Chinese bank would extend a significant loan to Sands, Ho responded that the government was not in a position to intervene.

"Until now, the Macau government has no concrete measures to help it solve its financing difficulties immediately," he said.

On Monday, Sands said it was suspending several projects, in Macau and elsewhere, and had agreements to raise $2.14 billion in new capital.

The announcement, amid worse-than-expected results for the third quarter, came after Sands said Thursday it was in danger of breaching lending conditions Dec. 31 and defaulting on $5.2 billion in credit facilities secured by its Las Vegas operations.

The company said it would temporarily shut down sites five and six along Macau's Cotai Strip, including a Shangri-La/Traders hotel tower, a Sheraton hotel tower and three casinos. The Macau sites cost $1.16 billion so far, and represent a part of the company's $13 billion master plan to develop Cotai.

The company said other projects, however, were still on track, including the $2.7 billion Marina Bay Sands to open in Singapore at the end of 2009.

Sands has controlled almost a quarter of of the gambling market in the southern Chinese gambling enclave, with its popular Venetian Macao Hotel Resort taking in $2.18 billion in revenues during its first 12 months.

Sands' successful Macau properties have given the company a needed boost in the last year, accounting for almost 70 percent or revenues.

A Sands representative did not immediately respond to a request for comment Tuesday evening.

On Tuesday, Ho said the suspension of Sands projects could cost some workers their jobs and revealed government officials had started discussions with the company to "make appropriate arrangements."

Ho also said he expected monthly gambling revenue to drop to about 7 billion patacas ($876 million) next year from about 8 billion patacas ($1 billion) a month this year.

"We expect there certainly will be some downward pressure on the entire gaming industry next year," he said. "Although there's pressure, we believe there're still business. On one hand, we have to be cautious, but on the other, we shouldn't be too pessimistic."

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AP Writer Dikky Sinn contributed to this report.