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Las Vegas Sands plan for two Macau parcels rejected

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AP Photo/Kin Cheung

The Sands Casino in Macau is seen Oct. 31, 2009.

Updated Thursday, Dec. 2, 2010 | 2:15 p.m.

Las Vegas Sands Corp. today disclosed that its long-term development efforts in China sustained a setback when the Macau government did not approve a land concession for what are known as Parcels 7 and 8 on the Cotai Strip.

Sands China Ltd., Las Vegas Sands' subsidiary in China, has 15 days to apply to the chief executive of Macau for a review of the decision and 30 days to appeal the decision to the Macau courts.

"SCL (Sands China) is considering all options available to it," Las Vegas Sands said in a regulatory filing today.

In a recent regulatory filing, Las Vegas Sands said it had capitalized construction costs of $102.4 million as of Sept. 30 for these parcels.

It said work on the parcels would begin after casino resorts are completed on parcels 5, 6 and 3, and after "necessary government approvals are obtained, regional and global economic conditions improve, future demand warrants it and additional financing is obtained."

Development of parcels 5 and 6 has been stalled by labor shortages.

In all, Las Vegas Sands has proposed three integrated resort developments on the Cotai Strip, in addition to The Venetian Macao and Four Seasons Macao, on an area of about 200 acres.

After dipping as much as 7.8 percent on the news today, Las Vegas Sands stock closed at $49.17, down $2.17 or 4 percent.

While casino operators exposed to Macau have enjoyed strong gaming win growth in the Chinese enclave (42 percent in November), the Xinhua News Agency last month reported Macau's government may tighten control of its casino industry and limit the number of new casinos, table games and slot machines.

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  1. Perhaps this is a blessing in disguise for Las Vegas Sands Corp. Although profits so far in Macau are staggering, overleverage can still kill a successful business. Slow down and apply most of the profits to debt reduction for the company. Then Sheldon can eventually leave a well-managed company to his heirs rather than one heavily in debt.