Las Vegas Sands seeks record Singapore loan to construct casino in nation

23.09.2007, Lesen Sie hier den Bericht über «Las Vegas Sands seeks record Singapore loan to construct casino in nation».

SINGAPORE: Las Vegas Sands, the largest casino operator in the world by market value, is seeking a record loan in Singapore currency to fund construction of the first gambling house in the nation, three people familiar with the deal said.

The gambling firm hired eight banks including Goldman and locals DBS, Oversea-Chinese Banking and United Overseas Bank to arrange the 5 billion Singapore dollars, or $3.3 billion, borrowing, according to the people, who declined to be identified because the information is private.

Regulated gambling including casinos in the Asia-Pacific market will expand 15.7 percent a year to $30.3 billion in 2011, according to PricewaterhouseCoopers. Singapore will compete for Asian gamblers with Macao, the Chinese city that reaped 55.9 billion patacas, or $7 billion, gaming revenue in 2006, surpassing the Las Vegas Strip as the biggest casino market in the world.

"Asia will contribute the most to growth of the global gaming industry, and market share here is important for gaming companies and for Las Vegas Sands," said Poh Huay Imm, an equity specialist at Deutsche Bank's private wealth management group. "Las Vegas Sands's casinos in the U.S. are cash cows and will help fund its Asian expansion."

The Asia-Pacific region will by 2011 replace Europe, the Middle East and Africa as the second-biggest gaming market after the United States, PricewaterhouseCoopers said.

The other four arranging banks are Morgan Stanley, Merrill Lynch, Lehman and Citigroup. Las Vegas Sands could not be reached for comment, while the banks either declined to comment or could not be immediately reached.

In its efforts to lure visitors and triple tourism revenue to $19 billion by 2015, Singapore lifted a four-decade ban on casinos in 2005, pledging to license only two within 10 years.

The second casino will be on Sentosa Island, known for its golf courses, amusement park and beaches, and will be built by Genting International, a unit of the biggest casino operator in Asia by market value.

"It's a big gamble, clearly, and too early to tell if the returns will be good," said Lim Kok Boon, the chief investment officer in Singapore at Fortis Private Banking, which manages $9.5 billion of assets. "But duopoly is very attractive for casino operators in a developed market like Singapore."

Casino revenue in the Asia-Pacific region will double to $25.5 billion in 2011 from $12.1 billion in 2006, with 79 percent of the growth generated in Macao and Singapore, PricewaterhouseCoopers said.

Singapore will receive $2.2 billion in annual revenue from 2011 when both casinos are operating, PricewaterhouseCoopers said.

Part of the 5 billion dollars will be used to repay a $1.4 billion 12-month borrowing arranged a year ago, according to the people. The 5 billion dollar loan, maturing in seven to eight years, will be the largest ever made in Singapore currency, according to data compiled by Bloomberg. It will be backed by the casino.

The interest margin on the loan will be between 2 percentage points and 2.5 percentage points more than the swap offer rate on Singapore currency, according to the people. The three-month rate is fixed at 2.62 percent Thursday. That compares with the premium of 2.75 percentage points over the London interbank offered rate that Las Vegas Sands is paying on $3.3 billion borrowed last year for its Macao expansion, a loan that matures in 2011. The three-month Libor rate is 5.59 percent.

"Banks will likely create a syndicate to spread the risk," Lim said. "The collateral in the form of land and building will appreciate."

Second-quarter profit at Las Vegas Sands, run by Sheldon Adelson, a billionaire, fell 69 percent as interest payments on funds borrowed to expand in Asia more than doubled from a year earlier to $54.4 million.

The downtown Marina Bay resort of Las Vegas Sands, neighboring the business district in Singapore, will feature three hotel towers linked by a sky garden, restaurants run by celebrity chefs Charlie Trotter and Thomas Keller and an art-and-science center.

The casino company's debt is rated three steps below investment grade at Ba3 by Moody's Investors Service and an equivalent BB- by Standard & Poor's

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