Sands wins bid for Singapore casino http://today.reuters.com/business/newsarticle.aspx?type=ousiv&storyID=2006-05-26T152400Z_01_SFA001816_RTRIDST_0_BUSINESSPRO-LEISURE-SINGAPORE-CASINOS-DC.XML
Fri May 26, 2006
By Sebastian Tong
SINGAPORE (Reuters) - Singapore picked Las Vegas Sands Corp. (LVS.N: Quote, Profile, Research) to build and run what will be the world's most expensive casino at a cost of more than S$5 billion (US$3.2 billion), sending the U.S. casino operator's shares up more than 9 percent.
The tiny island nation scrapped a ban on casinos last year in a move to shake off its staid image and capture part of Macau's success as a gambling center for Asia's increasingly wealthy and mobile middle class.
Las Vegas Sands, the world's largest gaming operator by stock market value, beat three other bidders with a promise to invest S$3.85 billion (US$2.4 billion) in the project, on top of the S$1.2 billion price tag for the land in downtown Singapore.
"This is a pretty big win for Las Vegas Sands," said Peter Dunay, chief investment strategist at fund management firm Leeb Group. "As far as real strong explosive growth, it is coming from the strength you are seeing in the Asian (market)."
The winning bid was a surprise to Wall Street, according to Deutsche Bank analyst Marc Falcone, who said competing groups led by rivals Harrah's Entertainment Inc. (HET.N: Quote, Profile, Research) and MGM Mirage (MGM.N: Quote, Profile, Research) were seen as more likely winners.
Las Vegas Sands submitted the best overall proposal and had the highest investment value, Singapore Deputy Prime Minister S. Jayakumar told a news conference. Las Vegas Sands is the only one of the three U.S. bidders that already operates a casino in Macau.
The Marina Bay resort is expected to open in 2009. By 2015, the government expects it to add S$2.7 billion to the economy, or 0.8 percent of gross domestic product, and create 30,000 jobs.
Las Vegas Sands will have a 30-year concession to run the casino, part of a 20.6-hectare (50.9-acre) waterfront redevelopment also featuring conference halls, performance venues and a hotel.
The U.S. casino operator, which runs the Venetian in Las Vegas in addition to the Macau casino, said in April it may raise as much as US$1.44 billion in a share sale, or up to US$3.24 billion in debt, to fund the project.
The company, which was advised by Singapore property firm City Developments Ltd. (CTDM.SI: Quote, Profile, Research), has already unveiled a design by Massachusetts-based architect Moshe Safdie that is inspired by decks of cards leaning against one another.
TOURISM BOOST
Las Vegas Sands said in a statement it was honored to be chosen and that its experience in meetings and conventions would "produce a steady and predictable flow of visitors to Singapore."
Las Vegas Sands shares were up US$5.98 to US$69.65 in morning trade on the New York Stock Exchange.
CapitaLand and its U.S. partner, MGM Mirage, said they were disappointed to learn of the government's choice of Las Vegas Sands. CapitaLand said it would push ahead with a proposal for the second casino with Bahamas-based Kerzner International (KZL.N: Quote, Profile, Research).
MGM Mirage shares were down 68 cents, or 1.6 percent, to US$41.79 on the NYSE, while Harrah's shares fell 39 cents, or 0.5 percent, to US$75.90.
The casino is an important part of Singapore's strategy to boost its tourism and services sector by tapping into the $13 billion of revenue expected to be generated from legal casinos in the region this year.
"They will bring in high-end tourists who will spend not only in the casinos but in other locations. Singapore will see higher passenger arrivals and better retail sales," said Centennial Group economist Manu Bhaskaran.
Singapore lifted its decades-old ban on casino gambling last year despite vociferous opposition from religious and social groups. But the government will levy an entry fee for locals to discourage them from gambling. Several prospective candidates for the first casino have fallen by the wayside since Singapore invited bids last year.
Las Vegas casino impresario Steve Wynn slammed Singapore bureaucrats for micro-managing areas such as design and withdrew his Wynn Resorts Ltd. (WYNN.O: Quote, Profile, Research) from the race in December.
An alliance between Macau's casino king Stanley Ho and Publishing & Broadcasting (PBL.AX: Quote, Profile, Research), controlled by Australia's Packer family, pulled out in January, citing high capital costs, including an upfront land cost of S$1.2 billion (US$760 million).
Proposals for the second casino, slated for the resort island of Sentosa, are due in October.
(Additional reporting by Jan Dahinten, Mia Shanley and Paritosh Bansal)
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