By Kate O’Keeffe
Of DOW JONES NEWSWIRES
HONG KONG (Dow Jones)–The Macau government has rejected SJM Holdings Ltd.’s (0880.HK) application for the same land Sands China Ltd. (1928.HK) was denied earlier this month, leaving a key piece of land up for grabs in the world’s largest gambling market.
The government said in a letter to SJM that the operator’s plans to build a casino on Sites 7 and 8 didn’t exempt it from a public tender, a person familiar with the matter said Friday. Sands China was told the same, people close to the situation said.
A spokeswoman for Macau’s land department said Friday it had rejected both operators’ proposals and that a public tender could be waived “when the concession is grounded in the public interest,” namely developing Macau into a “world center for tourism and leisure,” but that even in that case, the grant would need to be preceded by a public hearing.
However, SJM, which is controlled by gambling mogul Stanley Ho, is likely to secure land rights for another plot of land on Cotai in the first quarter of 2011, the person said.
The site is next to the Macau Dome and also next to land where a company controlled by Angela Leong, the fourth wife of Ho and an executive director of SJM, said it will invest MOP10.4 billion (US$1.3 billion) in a family-oriented theme park and hotel resort that doesn’t have a casino. SJM is in talks with Leong to connect the properties and share operating facilities, the person said.
The first-quarter timeline represents a delay from SJM Chief Executive Ambrose So’s earlier forecast. He said in September that land rights for planned casino projects in Cotai would likely be granted to SJM, Wynn Macau Ltd. (1128.HK) and MGM Macau by the end of 2010.
The news comes after the government this week reiterated it wouldn’t approve new casino projects submitted after 2008, and also said it would no longer grant land for casino projects without a public tender once the new Land Law comes into effect.
The government’s refusal to grant SJM rights to sites 7 and 8 without a public tender appears in line with its stated intention to increase the transparency of the land grant system, which was dealt a blow when Ao Man-long, Macau’s former secretary for transportation and public works, was found guilty in 2008 of pocketing around US$100 million in kickbacks during his seven years in the appointed position.
However, some question the government’s commitment to really improving the system. As the new land law, which the government started revising in 2008, won’t likely come into effect until 2012, analysts say it is unlikely to affect the land grants for casino projects planned by SJM, Wynn Macau and MGM Macau, now expected to be awarded early next year.
The government is “taking too much time” to revise the law, said Macau legislator Jose Pereira Coutinho. “Before the law comes into effect, it’s not appropriate to give land to the gaming operators.”
Meanwhile, Leong’s land, on which she will build six hotels and amenities such as shopping malls, amusement park rides, an indoor beach and wave pool, theater and an equestrian center, was granted ahead of the casino operators’ land requests ostensibly as it is in line with the public interest and Beijing’s and Macau’s calls for Macau to diversify its economy away from gambling.
Leong, a member of Macau’s legislative assembly, is also an executive director of SJM Holdings Ltd. (0880.HK), Macau’s largest casino operator by revenue, and the head of the Macau Association of Gaming Promoters–the middlemen who bring high rollers to casinos. She acquired Macau Theme Park & Resort Ltd., which has been awarded the land, after Chui Sai-cheong, the brother of Macau’s chief executive, left his position as a director of that company this past summer, according to another person familiar with the matter. Chui Sai-cheong claimed the valuable land since 2004 without building on it despite Macau’s government urging those who have land to develop it or risk losing it.
