Just weeks after the Singapore authorities gave an upbeat report that the Integrated Resort Casino will create thousands of jobs, developer Las Vegas Sands (or as some wit cracked, Lost Wages Sands) reported that it is haemorrhaging cash and will likely file for bankruptcy.
Auditor PricewaterhouseCoopers has raised doubts that Sands is financially viable. The company's share price plunged 32.7% to US$7.85 last Friday and its credit default spread is at 1804bp which indicates high risk.
The auditor also says that the gaming conglomerate will not be in compliance with maximum leverage ratio convenant for 4Q08. Filing for Chapter 11 bankruptcy protection is a distinct possibility.
Provided that IR Singapore can be shielded from its Las Vegas parent company and sold to another investor, it looks likely that the project will face a long and financially crippling delay. Negotiations for another backer will take many months and this has to take place before construction can recommence.
Given the current credit situation, where will such a buyer get additional funding bearing in mind that many mega-funded projects in the world have been put on hold since the tailend of 2007?
To make matters worse revenue for gaming resorts all over the world have declined, which is all a big worry for Singapore banks DBS, OCBC and UOB. They had led in extending a S$5.4b credit facility to Marina Bay Sands which makes them significantly exposed to the turmoil that is riling the parent company.
The total exposure of the three banks to the project is about $1.3b. It is understood that that about 50% of the S$5.4b has already been drawn down.
If Las Vegas Sands goes under, there are two possible scenarios: One, the consortium of banks gets another developer to take over the project. This looks improbable given that most international casino operators are already highly leveraged and unlikely to have the appetite to further expand into Singapore.
With the US economy tanking, Las Vegas gaming corporations are looking more to consolidate than expand their operations. And where they do venture overseas their main target is Macau, not Singapore.
Two, the Government throws open its doors to all and sundry in a desperate attempt to increase revenue. The entry levy for gamblers, currently pegged at $100/day or $2,000/year may be lowered or even done away.
The gaming area presently limited to less than 3 percent of the total floor area of the resort may be also increased. These adjustments will be aimed at making the project more appealing to potential investors.
Of course such a move will be a serious breach of promise that the Government made to Singaporeans when it pushed for the IR development. The social impact of the relaxed rules will be yet another cost to the Singaporean society.
A potential investor is, of course, Temasek or one of its subsidiary companies which are fiscally muscular enough to rescue the IR project.
But this is where in all gets a little, pardon the pun, dicey. The ruling party's image will be severely dented if the casino plans fail. Politically, there is much at stake for the Government. There will be great temptation for the Government to throw money - taxpayers' money - at the project to save face.
This is a perennial problem in a system where the nexus between corporations and politicians are as tight and opaque as it is in Singapore.
And there could be a double whammy here for Singaporeans. Even if the IR is successful in finding another investor, Las Vegas Sands will continue to be disadvantaged by the current global economic crisis and it will be stuck with the US$5b credit facility money it now owes. Mind you, the new investor is not obligated to ensure the banks recover their money.
Frighteningly, Singapore banks do not have to disclose precise exposures to individual customers due to banking secrecy laws here. The negative turn of events at Sands will no doubt hit share prices for all the three Singapore banks. Singaporeans will be left to carry the baby yet again.
High probability that "There will be great temptation for the Government to throw money - taxpayers' money - at the project to save face."
Continue to support your dearest PAP to your own downfall. Good luck !!
Anonymous
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Sun, 09 Nov 2008 2:16 am
Decisions made without consultation of the people are flawed. Thinking that they were smarter than anyone else, the project went through. Suddently, MARINA BAY was full of banglas and chinamen. Then, business schools were promoting tourism, casino management courses. And people taking them up with the IR in mind.
Now, if this project fails to bring in the result, not only LKY but i say the whole PAP can go and prepare their graveyard for the next elections.
The IR was opposed by many Singaporeans (well I don't have the numbers but it was many) but yet this elitist people who have lost touch with the ground insisted on the project.
Starting with their "wayang" parliamentary debate, forums and all the nonsense they could find and TA DA! The IR project went through.
Well, the only thing we hope now is that we have a better future to look up to. Because a lot of Singaporeans have betted on the IR and have a lot of expectations.
G Chen
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Sun, 09 Nov 2008 2:44 am
Eventually I believe Singaporeans will be made to pay for any shortfall in the IR project and the losses made by town councils, Temasek and GIC..now I know why there used to be a milk advert which said that New Zealand has as many cows as Singapore's population..guess Singaporeans are really treated like cows.
Anonymous
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Sun, 09 Nov 2008 3:03 am
you got it right, gaming tables will be increased from 600 up to 1,000
http://www.bloomberg.com/apps/news?pid=20601087&sid=av1r7jv1sFT0&refer=home
I'm really wondering about this whole asian values facade. my all-time favourite is no playboy magazines, but we allow prostitutes, yeah, thats the way to go. I'd sure like a minister to explain this one, or anyone for that matter.
David
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Sun, 09 Nov 2008 3:18 am
How about making IR the suicide platform for the gahmen when IR fails ? They can bungee jump without protection.
Short Sighted Leaders
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Million Dollar Short Sighted Leaders
Sun, 09 Nov 2008 9:22 am
How can they be SO IGNORANT.
Just two weeks ago, they fooled thousands of citizens giving them false hope. Made and any my neighbours wasted our money and time to queue for jobs in Sands....
Two weeks later, the potential Employer is facing bankruptcy...
What type of leaders...
Anonymous
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Poor Singaporeans made yet poorer - again
Sun, 09 Nov 2008 10:17 am
Singaporeans will be left to carry the baby yet again.
Carry the BABY? More like the BOMB - the A-BOMB, that is.
姓「灾」 名「乐祸」
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Tough-luck Singaporeans
Sun, 09 Nov 2008 10:24 am
Quote:
Continue to support your dearest PAP to your own downfall. Good luck !!
Well, the time bomb had already started ticking when that Hakka with an agenda to bankrupt this British crown jewel came into office in 1959.
Or was it 1923 - when the Devil-reincarnate came into being at all!
Insider
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Sun, 09 Nov 2008 10:35 am
Quote:
From wat i understand, OCBC has higher interest also though not by much.
You ought to perhaps also understand that OCBC is the banking arm of Lee Rubber Company
- whose founder was the true Singapore son Lee Kong Chian (Heavens bless his soul; he's a true Hokkien, from Nan'an, so no relations with Hakkas)
and whose descendant-beneficiaries including Lee Seng Gee, Lee Seng Hee of the Lee branch & the Tan (Lark Sye's)branch's Tony Tan (that Hokkien traitor) who have also since inter-married with the Hakka Lees.
And being the scion of the Tan-Lee extensded family, OCBC will in time to come be ABSORBED into the GIC-Temasek-PAP supermegaconglomerate.
jacys
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Most Singaporeans support the PAP's IR plans
Sun, 09 Nov 2008 10:36 am
Opposed by "many" Singaporeans ??? Can you show us the figures ?
Other than a few religious right who oppose the casinos on moral grounds, the majority of Singaporeans support the PAP's plans to diverstify the economy including the Workers' Party.
If even the opposition WP supports the PAP's plans, it shows what they are doing is correct.
WP is a constructive opposition which does not oppose for the sake of opposing unlike some "mad dog" here.
Ximen
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Jacys - Have you forgotten almost half of Singapor
Sun, 09 Nov 2008 11:31 am
You mean WP is a lap dog of PAP? Haha. There is no mad dog here, i mean SPCA would have gotten them. I am totally against CAsnio project here in Singapore. I am glad that this project now going to hit the rocks but dismayed that Sinkies are going to pay more for the gov lack of foresight.
SDP so far has been the wise opp party, if the ruling gahmen heed the people who oppose this plan, there wont be a problem now at all. I am sure LVS will default and close or sold the project in singapore away. Who will lose out in the end?
About Time
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The Downfall, Domino Style
Sun, 09 Nov 2008 12:31 pm
It is obvious that God is giving retribution to the tyrants. And believe me, this is the lightest sentence God gave.
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jacys,
When you work is equal to you act.
Work = Act. Workers = People's Action. So Workers' Party = People's Action Party lah.
LoL
k z
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re: Most Singaporeans support the PAP's IR plans
Sun, 09 Nov 2008 1:39 pm
jacys wrote:
Opposed by "many" Singaporeans ??? Can you show us the figures ?
Other than a few religious right who oppose the casinos on moral grounds, the majority of Singaporeans support the PAP's plans to diverstify the economy including the Workers' Party.
If even the opposition WP supports the PAP's plans, it shows what they are doing is correct.
WP is a constructive opposition which does not oppose for the sake of opposing unlike some "mad dog" here.
umm if it wasnt opposed then why did the govt need a feedback session and all that..
and how many times before did lky say singapore is not a place for a casino.
im not a religious person but i dont support the casino because there are other areas we can diversify into.
casinos are for places where there was nothing else to go into like las vegas and macau. we are so much more better then that.
ah beng
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re: Most Singaporeans support the PAP's IR plans
Sun, 09 Nov 2008 4:01 pm
jacys wrote:
Opposed by "many" Singaporeans ??? Can you show us the figures ?
Other than a few religious right who oppose the casinos on moral grounds, the majority of Singaporeans support the PAP's plans to diverstify the economy including the Workers' Party.
If even the opposition WP supports the PAP's plans, it shows what they are doing is correct.
WP is a constructive opposition which does not oppose for the sake of opposing unlike some "mad dog" here.
So does WP has a plan?
Anonymous
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re: Most Singaporeans support the PAP's IR plans
Sun, 09 Nov 2008 4:20 pm
jacys wrote:
Opposed by "many" Singaporeans ??? Can you show us the figures ?
Other than a few religious right who oppose the casinos on moral grounds, the majority of Singaporeans support the PAP's plans to diverstify the economy including the Workers' Party.
If even the opposition WP supports the PAP's plans, it shows what they are doing is correct.
WP is a constructive opposition which does not oppose for the sake of opposing unlike some "mad dog" here.
Thank you for letting us all know the WP's perspective on this issue, and that you in fact stand united with the PAP.
Now we have a few more reasons for why we SHOULD NOT VOTE FOR YOU.
Perspective 
Just weeks after the Singapore authorities gave an upbeat report that the Integrated Resort Casino will create thousands of jobs, developer Las Vegas Sands (or as some wit cracked, Lost Wages Sands) reported that it is haemorrhaging cash and will likely file for bankruptcy.
