Las Vegas Sands goes begging for funds

There are a number of differing reports on this. An early report by Bloomberg (20 Oct 2008) said, "Las Vegas Sands Corp., the second- biggest casino operator by market value, is in talks with banks including Citigroup Inc. about revising terms of the HK$40.95 billion ($5.28 billion) loans it's seeking for Macau projects."

These loans "were to help repay $3.3 billion of debt from 2006 and fund new projects in Macau's Cotai Strip, a plot of reclaimed land between the city's Coloane and Taipa Islands." [1] 

Then Reuters reported, 4 days later: "Casino operator Las Vegas Sands Corp said on Friday it is working with an investment bank to raise capital." [2] 

A day later, the Straits Times' online Breaking News site said, "Casino mogul Sheldon Adelson has said he is seeking to raise US$2 billion (S$3 billion) in debt financing from Asian banks to complete work on expansion projects planned by Las Vegas Sands Corp in Macau."

Citing an original report from the Associated Press, Straits Times quoted Adelson saying, "We hope to find a more receptive air over there than in the US." Apparently, according to him, foreign banks are in better shape to participate in such deals than their US counterparts right now. [3] 

Under construction: Marina Bay Sands Integrated Resort (Sept 2008)

 
The picture I can piece together from the various reports is one of Sands being unable to generate enough cash from its existing Las Vegas and Macao operations to repay loans and fund a US$12 billion project in Macao. This is in addition to the US$4 billion project in Singapore. It first tried to renegotiate an existing loan, but that did not appear to be successful, so it had to both raise capital and seek new funding from Asian banks.

The latest Bloomberg report I saw was quite alarming. Quoting Steven Wieczynski, a Baltimore-based analyst with financial services firm Stifel Nicolaus, it said: "With credit markets in turmoil, investors believe Las Vegas Sands is in jeopardy of running out of cash and going bankrupt.''

"Management has done nothing to assure investors the company will emerge from this financial crisis,'' he added. [4] 

According to the same report, Sands' shares have lost 94 percent of their value this year.

In the wake of the 1997 Asian Financial crisis, a large number of projects in Thailand and Malaysia were abandoned when the companies behind them went belly up, leaving forlorn pillars like modern-day Stonehenges, or flooded pits in the ground breeding mosquitoes. Will this happen to Sands' half-completed casino being built at Marina Bay?

To avoid this fate, would the Singapore government have to bail out Sands' project here? Would we have to sink another few billion to keep construction on track?

More importantly, seeing how revenues for the entire gaming industry have slumped in both Macao and Las Vegas, will both the casinos now being built -- on Marina Bay and Sentosa -- get anywhere near their original revenue projections when they finally open in 2 years' time?

  
People's Daily: U.S. has plundered world wealth with dollar

A front-page commentary in the overseas edition of the People's Daily called on Asian and European countries to banish the U.S. dollar from their direct trade relations, using their own currencies instead.

Referring to global economic crisis, Shi Jianxun, a professor at Shanghai's Tongji University, wrote: "The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar's hegemony to plunder the world's wealth." [5] 

The idea is not new. Economists have long pointed out how the US has been enjoying an advantage in the way its own currency acted as the world's reserve currency. The US could afford to run a chronic trade deficit simply by issuing more money, which other countries are, (or were) happy to hold as their national reserves. In effect, the American consumer could keep up a high standard of living based on other countries' manufactures and services, just by having their government issue IOUs.

It has long been asked when other countries would finally tire of holding US Treasury bills, or buying US assets with their export earnings. Surely, this cannot go on forever. In the long term, the US dollar must depreciate against other economies that perform better. This being the case, it does not make much sense for these surplus-generating countries to continue accumulating US dollars.

In the short term though, the volatility is stunning. After falling dramatically through most of 2008, the US dollar has recently leapt up against the Euro and many Asian currencies. This very instability in exchange rates itself hurts economies. No one can predict costs and prices and so everybody gets extra cautious, sending a chill through all trade.

Thus, a lot of work needs to be done with the world's financial architecture before we truly absorb the lessons of the last two decades.

But does a front-page commentary on the usually authoritative People's Daily signal Beijing's thinking? Reuters noted that while the People's Daily is the official newspaper of China's ruling Communist Party, its overseas edition is a small circulation offshoot of the main paper. Its pronouncements do not necessarily voice leadership views, Reuters said, though Shi's latest commentary adds to a growing chorus of Chinese disdain for Washington's economic policies and global financial dominance in the wake of the credit crisis.

As with all crises, it is only to be expected that something new will emerge from events.

Former British Foreign Secretary, Malcolm Rifkind, in a commentary in The Telegraph, [6] wrote about the political consequences:

We may be over the worst but we should not underestimate the damage that recent events have done to the reputation of Western free-enterprise capitalism as an attractive model for the rest of the world to emulate. All have seen New York, London, Paris and Tokyo calling in the Old World to rescue the New; asking governments, the state sector and the taxpayers to save the entrepreneurs and capitalists. The Russians, the Chinese and other authoritarian states are only too happy to have this confirmation that strong governments that curb free enterprise are, it turns out, as necessary in the West as in their own countries.

[snip]

Political power will follow economic, and even if there is no reason to assume that Asian prosperity will outstrip that of the US and Western Europe, it will undoubtedly reach it in a generation or so. While that may hurt our self-esteem, it may be a price worth paying if it creates a fairer and, therefore, a more stable world.

[snip]

The peoples of the United States and Western Europe must, however, recognise that forces are at work which, in due course, will change our place in the world. Such change will reduce our pre-eminence, but, if it creates less inequality and less bitterness around the globe, it might enhance rather than reduce our security.

 
Vietnamese brides, again.

The third news item that caught my eye was quite different in nature from the above two. It had to do with the impact of the economic crisis on the selling of Vietnamese women, touching once again, one of my raw nerves.

"At least one marriage agency is charging half-price to matchmake Singapore men with Vietnamese brides," the Straits Times reported. [7] 

The story told of how Mark Lin of Vietnam Brides International Matchmaker had taken out advertisements in Chinese newspapers earlier in the week, offering the discount on the grounds that his business has been hit by the global financial crisis. "Three Vietnamese women have been at his Orchard Plaza office in the last two months, waiting for prospective husbands," the Straits Times reported.

What? This man has 3 women in his shop waiting for buyers? Is he running a pet shop?

Wouldn't these women be highly vulnerable to abuse by the men and their families? What is Singapore doing about such risk of human rights violations?

Confirming how sordid the entire "wife-for-sale" business is, the newspaper wrote, without the slightest trace of embarrassment,

Mr Lin is charging $4,000 as his matchmaking fee for each -- half the fee he usually charges for flying them in and feeding and housing them. Over 20 men have inquired about the women this month, but he has yet to make a match.

In better times, his business was behind up to eight weddings a month.

Beer promoter Bui Thi Tuoi, 21, has been waiting for a match since the end of August. She nearly got hitched this month: A businessman in his 50s picked her and paid Mr Lin a $2,000 deposit, but he is now having second thoughts after losing money in the financial crisis.

Is this what "holy matrimony" means? Why is this kind of thing marriage, with the full backing of law, social approval and religious ceremony, when two persons of the same sex, living together and loving each other for decades, is not?

© Yawning Bread