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Genting International, the overseas arm of Malaysia’s Genting Bhd, and Las Vegas Sands are reportedly facing more cost overruns on their casino-resort projects in Singapore.
Genting International said late on Thursday that its Resorts World at Sentosa, which is scheduled to open early next year, will cost S$6.59 billion ($4.32 billion) compared with the previous estimate of S$6 billion.
Genting had originally projected the cost of the project at S$5.2 billion.
Las Vegas Sands Corp has also been hit by spiralling construction costs in Singapore, The Straits Times newspaper said on Friday. Sands recently revised the cost of its Marina Bay Sands casino-resort to $5.4 billion versus the previous estimate of $4.5 billion and an initial estimate of $3.2 billion.
Singapore legalised casino gaming in 2005 and said it will allow two multi-billion-dollar casinos to be built as part of an ambitious plan to double annual visitor arrivals to 17 million by 2015.
Casino operators worldwide are being stung by a squeeze in credit markets and a drop in business as the global recession spreads.
Las Vegas Sands faces third shareholder lawsuit
Las Vegas Sun
A third lawsuit has been filed on behalf of Las Vegas Sands Corp. shareholders against members of the company’s board of directors.
Shareholder Frank Fosbre Jr. sued Sands Chairman and Chief Executive Sheldon Adelson and the other directors in Clark County District Court Feb. 6. The suit levels allegations of mismanagement and violation of fiduciary duty, similar to claims asserted in earlier suits filed in November and January in the same court.
The shareholder lawsuits were prompted by the steep drop in the value of Las Vegas Sands stock, from about $125 per share in November 2007 to about $2.75 on Thursday.
Las Vegas Sands does not comment on pending litigation, but its attorneys are fighting the earlier lawsuits.
Sands attorneys have said in court papers that the plaintiffs have failed to come up with specific allegations of misconduct or fraud, and that the Sands directors acted appropriately to deal with turmoil in the financial markets and the slowdown that hit the gaming industry last year.
The latest suit was filed for Fosbre by attorney Margaret Stanish of the Las Vegas firm Wright Stanish & Winkler; along with attorneys for the Wilmington, Del., firm Rigrodsky & Long; and Pittsburgh lawyer Alfred Yates Jr.
The three pending suits are “derivative’’ actions that aim to have the company, through its shareholders, essentially sue its own directors for damages the company may have sustained.
“Adelson has capitalized upon the economic downturn and faltering financial condition of the company by making additional substantial investments in Las Vegas Sands that have continued to dilute the common shareholders’ interests, without their input or consent, while cementing his majority stake in the company,’’ the latest suit alleges. “Adelson, together with other members of the board who are beholden to him, have mismanaged the company and damaged its prospects by spreading the company too thin over numerous projects that, for one reason or another, were impossible to complete under the conditions then-existing.’’
For the fourth quarter ending Dec. 31, Las Vegas Sands reported revenue rose 4.3 percent to $1.09 billion and that it lost $111.3 million or 27 cents per share vs. a profit in the 2007 quarter of $39.9 million or 11 cents.
Counting accumulated but unpaid preferred stock expenses, the loss in the 2008 quarter was $136.5 million.
In its Feb. 11 earnings report, Las Vegas Sands said its massive Venetian and Palazzo resorts on the Las Vegas Strip with their combined 7,100 suites generated solid cash flow and room occupancy of 93.7 percent in the quarter — a strong percentage considering the weak economy.
Adelson personally pumped additional capital into the company last year to improve its liquidity and its ability to finance developments.
He said in the earnings report that development continued to progress on projects in Singapore (a $5 billion resort complex opening in less than one year) and in Pennsylvania — a casino and entertainment complex that is estimated to cost $744 million with 3,000 slot machines. It’s 70 miles from Manhattan and is due to open in the second quarter of this year.
“We look forward to bringing these two new properties online, and we expect each to significantly increase our cash flows,” he said in the report. Adelson added in the report: “We remain confident that the revised business plan we introduced in November provides the flexibility to manage through the current operating conditions in Las Vegas and Macau while preserving the value of our important developments in Singapore and Bethlehem, Pa. While developments beyond Marina Bay Sands in Singapore and Sands Bethlehem in Bethlehem, Pa., are suspended until both the operating and financing environments improve, the remainder of our plan, including the sale of non-core assets, remains consistent with my original vision for the company.”