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Howard Stutz

Gaming Outside Nevada: Singapore Picks Sands

30 May 2006

LAS VEGAS AND SINGAPORE -- The news from Singapore was coming and Las Vegas Sands Corp. prepared for the worst.

The casino company learned late Thursday night that the Singapore government was about to award the right to build a potentially lucrative hotel-casino complex in the city-state's marina district. So, Las Vegas Sands, one of several bidders for the site, drafted two press releases: one announcing a victory, another conceding defeat.

Las Vegas Sands President Bill Weidner was ready to distribute the latter.

"We wanted to tell the market that we were still alive and kicking," said Weidner, whose company operates The Venetian.

After a phone call from Singapore authorities at 2:15 Friday morning announcing the company had been awarded one of the most hotly contested gaming opportunities in the past few years, Weidner told Las Vegas Sands spokesman Ron Reese to destroy all evidence of the conceding statement.

The victory gives Las Vegas Sands the right to build an estimated $3.6 billion integrated resort, which will include Singapore's first casino.

The Singapore government began the process of opening its borders to casino gambling two years ago as a way to increase tourism to the small island off the tip of Malaysia. Bids for a second casino location are due in the fall.

The process attracted some of the gaming industry's largest casino operators, many of whom, such as Harrah's Entertainment and MGM Mirage, forged partnerships with Asian entertainment, convention and retail companies in their bids.

Las Vegas Sands chose to go it alone.

"We basically put ourselves out there, saying, 'here's what we've accomplished and here's what we're proposing,' " Weidner said.

In its bid to the Singapore government, Las Vegas Sands said the proposed Marina Bay Sands would include 2,500 hotel rooms, 1.2 million square feet of meeting space, 1 million square feet of retail, and three entertainment venues, in addition to the casino.

Singapore's Deputy Prime Minister S. Jayakumar said the proposal best met the city-state's economic and tourism objectives, and would significantly strengthen Singapore's position as a leading destination for conventions and exhibitions.

"The (Sands) proposal also possesses unique design elements which will provide a memorable image for Marina Bay," Jayakumar said.

According to the Singapore Tourism Board, the bidders were judged based on four criteria: tourism appeal and contribution; architectural concept and design; development investment; and strength of each consortium and its partners.

Many analysts and observers had ranked the Las Vegas Sands bid behind proposals from rival casino giants Harrah's and MGM Mirage because of those companies' Asian partnerships. Malaysia-based Genting International PLC also bid on the project with Star Cruises Ltd.

In addition, questions were raised about Las Vegas Sands' commitment to Singapore. The company operates the Sands Macau in China and is developing Macau's Cotai Strip, a destination that is being billed as "Asia's Las Vegas," with plans for nearly two dozen hotel-casinos. The company is also spending $3 billion to build the Venetian Macau to anchor Cotai.

In the end, Weidner believes the company's track record in Las Vegas and development plans for China helped convince Singapore leaders to support the bid. The company's experience in the meetings and its convention and exhibition businesses, which has included building and operating large convention facilities, also impressed decision makers.

"There were questions, but northern Asia is going to be driven by Chinese tourism and southern Asia (Singapore) will be driven by visitation from other areas," Weidner said. "This allows us to create not only a large footprint in northern Asia, but now a huge footprint in southern Asia that will enable us to generate mutual benefits for both economies and for visitors alike."

Weidner said the company's history in building destination resorts may have also been a factor.

"We don't acquire properties. We design and build them from the ground up," Weidner said. "I think our ability and our track record helped."

Deutsche Bank gaming analyst Marc Falcone agreed with Weidner's assessment in a note to investors Friday.

"We believe Las Vegas Sands' well known familiarity with the convention and exhibition business played a key role in deciding the bid," Falcone said. "It remains difficult to determine the return potential for the project, as the regulations and specifications remain uncertain."

Investors were bullish on Las Vegas Sands following the announcement. The company's price on the New York Stock Exchange had taken a beating much of the week due to profit-taking, analysts said.

Friday's announcement sent shares soaring more than 12 percent when the market opened. By the end of the day, more than 7.5 million shares were traded with the price closing at $69.63, up $5.96, or 9.36 percent.

Weidner said Las Vegas Sands would jump into the final design process for Marina Bay Sands on Tuesday. He was unsure when construction would begin. However, he said the company will open 100 percent of the facility sometime in 2009.

"We're doing a press conference in Singapore on Tuesday to introduce the design consultants and our partners," Weidner said. "We have a lot of our people in place."

Singapore Trade and Industry Minister Lim Hng Kiang said the Marina Bay Sands would directly employ 10,000 people and result in 20,000 jobs being created in other industries.

On the other end of the spectrum, both Harrah's and MGM Mirage released separate statements commending the Singapore government for conducting a "thorough and detailed process."

However, while Harrah's Chairman Gary Loveman congratulated Las Vegas Sands, MGM Mirage made no mention of its competitor.

Loveman was complimentary to Singapore, leading some analysts to believe the company would bid on the city-state's second casino site on Sentosa Island. Responses to Singapore's request for proposals on that location are due Oct. 10.

Bear Stearns gaming analyst Joe Greff said Harrah's could scale down its Caesars Singapore proposal for Sentosa Island. He believes MGM Mirage will take its development dollars to Atlantic City and build a project similar to its planned $7 billion Project CityCenter in Las Vegas.

MGM Mirage spokesman Alan Feldman said the company wouldn't bid on the Sentosa Island site. Harrah's spokesman Alberto Lopez was noncommittal on the company's plans, saying executives still had time to review options in regard to Sentosa Island.

Other gaming companies expected to bid on the Sentosa site include Kerzner International and Isle of Capri casinos.