Sands looks to restart Macau casino work next year

[November 16, 2009]  HONG KONG (AP) -- U.S. casino operator Las Vegas Sands Corp. plans to resume work in January on its multibillion-dollar gambling resorts in Macau after suspending construction last year amid a massive funding crunch, the company said.

Sands is seeking to raise more than $3.3 billion from an initial public offering of shares in its casino businesses in the southern Chinese enclave, the world's largest casino market. The IPO was made available to retail investors Monday after attracting what executives said was strong demand from institutional investors last week.

About $500 million will be used to restart construction on the projects, executives said. The company plans to hire as many as 12,000 workers after 11,000 jobs were cut as a result of the suspension.

The projects, including casinos and Shangri-La and Sheraton hotels, were stalled last year as the company grappled with a cash shortage, brought on by the financial crisis and Sands' massive debt load, that threatened its agreements with creditors.

Sands' latest casino resorts are part of Chairman Sheldon Adelson's quest to turn a section of Macau known as the Cotai Strip into a Chinese version of the Las Vegas Strip with a mix of gambling, conventions, shopping, entertainment and other draws.

"We expect that Macau will evolve into the same type of business model that the integrated resorts on the Las Vegas Strip have evolved into," Adelson said in a video conference Sunday with reporters in Hong Kong.

Sands hopes to open the first phase of the project, including two hotel towers and casino space at a cost of $2 billion, by June 2011. Ultimately, the company aspires to build still more casinos and hotels on two additional plots of land in the Cotai area to bring the total number of hotel rooms to 20,000.

Adelson repeated his goal of luring a wider variety of visitors to Macau, which relies overwhelmingly on day-trippers and high-stakes gamblers for profits, whereas Las Vegas earns a larger portion from non-gambling activities like shows and shopping.

Despite its attempts to diversify, Sands' Macau business is still heavily dependent on gambling. The Macau operation includes two casino resorts, the Sands Macao and the popular Venetian, as well as a Four Seasons hotel, deriving some 80 percent of its revenues from VIP and mass-market gambling. Its Macau profits before interest, tax and other adjustments were forecast to rise from $686 million in 2008 to $803 million this year, as the city's gambling industry rebounds sharply with the help of a stronger Chinese economy.

Much of the proceeds, an estimated $819 million, will go toward paying back its enormous debt and shareholders who lent the company money. The company's debt load stood at nearly $11.8 billion as of Sept. 30. Adelson and his family invested hundreds of millions of dollars more in the company last year to help it stave off bankruptcy.

Sands' new shares are expected to begin trading on the Hong Kong Stock Exchange on Nov. 30, with the share price to be determined Nov. 21, according to the IPO's terms.

It will mark the second Hong Kong IPO from an American casino operator. Shares in the Macau resorts of billionaire Steve Wynn debuted last month after a $1.63 billion IPO.

[Associated Press; By JEREMIAH MARQUEZ]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.