There may have been more to the recent lunchtime meeting between Dr Stanley Ho of SJM Holdings and Sheldon Adelson of Las Vegas Sands Corp. than “everybody getting enough rice to eat”, as Dr Ho so memorably put it.
Asian Gaming Intelligence‘s sources suggest that either during the meeting or sometime shortly before or after, Dr Ho offered to buy Mr Adelson out of his currently suspended Plots 5 and 6 on Cotai at 40 US cents on the US dollar.
LVS is pretty widely stretched with USD10.8 billion in long term debt as of the end of last year spread across building projects in the US, Singapore and Macau. Dr Ho’s Cotai offer, if true, might be something Mr Adelson would look at seriously.
It might actually be good news on two fronts for LVS to get Dr Ho actively involved in Cotai. At the moment his formidable marketing machine (including his casino operating company SJM and his ferry and coach business Shun Tak) is focused on doing all that it can within the bounds of fair competition to keep visitors as far away from the place as possible.
Dr Ho was supposed to have a casino presence on Cotai following a land swap deal in 2006. In the deal, the Macau government indicated it would allow Shun Tak to exchange a 1.1 million square feet piece of land it acquired in Taipa in 2002 for HKD500 million, for a plot on Cotai. Following the arrest, trial and imprisonment for corruption of Ao Man-long, a former Macau secretary for transport and public works, land swap deals went out of fashion in Macau, and public tender for land sales at going market rates became all the rage. SJM was pretty vague in its IPO prospectus last year regarding its plans for Cotai, referring only to “preliminary plans for two mixed-use developments”.
What the Macau government—which legally owns title to all the land in the territory and leases it out for commercial purposes typically for 25 years at a time—would have to say about a deal between SJM and LVS for land on Cotai isn’t known. What is sure is that Dr Ho knows all about timing when it comes to buying low and selling high.
AGI can’t recall whether the lease price paid by LVS for Plots 5 and 6 has ever been made public. We’re sure a reader will remind us of the facts. It was reported that Harrah’s paid USD578 million for a 175-acre golf course—the second biggest plot on Cotai (an area reclaimed from the sea) in September 2007. Michael Chen, Harrah’s President in Asia, played down the reports at that time. In any case, Harrah’s was widely thought to have paid over the odds, given that it had no Macau gaming licence or permission to build a casino.
Another idea doing the rounds since the beginning of April is that SJM may be interested in buying a stake in The Venetian Macao. SJM director Ambrose So, a man widely thought to have the ear and the confidence of Dr Ho, said as much in a public statement to the local media.
Watch this space for more news.
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