Shifting Sands At Marina Bay Casino

Las Vegas Sands, the company building Marina Bay Sands resort, one of two casinos championed by PM Lee Hsien Loong, saw its share price plunge from a 52-week high of US$144.15 to Tuesday's (21 Oct 08) price of US$12.43, on concerns about a slowdown at its US operations, profitability of its Macau casinos and high gearing. According to Associated Press, Las Vegas Sand's CEO Mr Sheldon Adelson and his wife lent the company US$475 million this month to meet liquidity requirements and avoid triggering a loan covenant. Sheldon disputed reports that his company was having trouble getting banks to agree to terms.
Mr Sheldon said in February that it had obtained all the necessary financing, amounting to $5.25 billion, to develop the Marina Bay Sands casino, which is due to open at the end of 2009.
Not exactly good news for local banks DBS, OCBC and UOB, who are among the 12 lead arrangers of the $5.25 billion loan. "Although the banks are well capitalised, this may be a significant hit because they are lead arrangers for the syndicated loan," said UOB Kay Lian bank analyst Jonathan Koh. Mr Koh said in a note that OCBC and DBS could still be holding a bulk of term loans allocated, although UOB might have distributed a portion of its term loans to foreign banks.
Already embroiled in the repercussions from the Lehman Brothers collapse, DBS admitted its standards in the sale of the Lehman-linked notes were not followed in some cases and announced investors involved will be compensated immediately. DBS Bank issued and distributed DBS High Notes 5 in Singapore and other Lehman-linked products in Hongkong, and estimated total compensation in Singapore and Hongkong of at $70 to $80 millions. It sold the Lehman-linked structured notes to 4,700 customers in the two economies, who invested a total of $360 millions.
Mr Leng Seng Choon, head of research at DMG & Partners Securities, highlighted that investors in the Marina Bay Sands casino complex should note that there is "some national interest" in this project. "The entire project was first initiated by the Government, I think we have to take that into consideration." Is he suggesting that the taxpayers may be picking up some of the tab?