Future uncertain for 11,000 workers as Sands halts Macau expansion plans

Friday, November 14, 2008
Issue 527, Page 1 & 3
Word count: 1083
Published in: Macau Daily Times

By Poyi (Natalie) Leung

A large number of the 9,000 construction workers from the recently suspended Las Vegas Sands Corp (LVS) Parcels 5 and 6 expansion plans on the Cotai Strip would be arranged to depart Macau, however some of the remaining 2,000 local workers would still have to lose their jobs, senior executives of the American casino company said in Macau yesterday.

Stephen Weaver, the Asia president of LVS, said the company was in talks with a syndicate of banks including those from Europe, Asia and the US in order to secure US$1.5 billion to US$2 billion for the resumption of the two-parcel development in the SAR which included hotels under the Shangri-La, Traders, Sheraton and St Regis brands.

However, Mr Weaver also said that if they were not able to raise the required funds within the six month or 180 day suspension period as entitled by the construction contracts, they might have to terminate the expansion projects in Parcel 5 and Parcel 6 on the Cotai Strip.

The firm’s Asia president together with Eric Chiu, the president of Asian Development and Mark Brown, the president of Paiza Asia, Sands Macao and The Venetian Macao Resort Hotel gave a press briefing yesterday as prompted by chairman Sheldon Adelson’s announcement on November 11 that LVS would halt part of its development project in Macau due to trouble accessing credit amid the global financial turbulence.

Mr Weaver announced that LVS had already secured a capital of US$2.14 billion in four days to fund the ongoing operation of the company and the equity contributions required for its project at The Marina Bay in Singapore.

As for its development in Macau, the Asia president said LVS would seek a separate project financing which would “fully fund” the contractual and supplier obligations the company had incurred in the construction to date.

“The company is working with a syndicate of banks to arrange for a US$1.5 billion to US$2 billion project financing for Parcels 5 and 6 of the Cotai Strip project,” Mr Weaver said, adding “the funding being sought will cover the cost of completion of Phase 1 of the Parcels 5 and 6.”

However, he gave no timetable on when funding might be secured or when the construction might resume.

“We would not have suspended if we could see clarity on how long it would take to raise the funds,” the Asia president said.

“We also would have preferred not to suspend construction of Parcels 5 and 6 because we’ve always believed that a critical mass of hotel rooms ensures success here,” he added.

As LVS had exercised the right to suspend work for up to six months, Mr Weaver said the act could hold the contract in place before the project financing could be finalised.

“If we decided that we won’t go to restart within that period, we could decide to terminate which would mean an inconvenience for us as we’re going to go back and rebuild all the work and start again,” he said.

When asked whether the company was confident in obtaining the required capital, the Asia president told the Macau Daily Times they could not make any prediction at this moment, adding “the banking system has got much worse” but had to believe that “things will get better”.

Having decided to focus their energy on optimising the performance of the existing businesses in Macau and also completing The Marina Bay Sands project, Mr Weaver told the media it was an “appropriate response” to the downturn in the global economy and the problems in the credit markets.

“This move also aligns the company with the Macau SAR Government’s intention to slow down the pace of development of the gaming industry,” he added.

The future of the 11,000 affected workers

According to Mr Weaver, before the decision to suspend Parcels 5 and 6 was made, LVS had already responded to a request of the SAR government to cancel work permits for non-local construction workers.

At the moment, Mr Weaver said they were working with the authorities and the contractors to arrange for departure of those workers.

LVS had hired about 11,000 workers on the sites of Parcel 5 and Parcel 6 projects, of which 2,000 were locals while the rest were primarily from Hong Kong and mainland China.

“There will be a significant number of the 9,000 non local workers required to leave given our commitment to retain local employees first,” Mr Weaver said.

Not only would all the construction workers affected by the suspension be compensated according to law and contractual terms, the Asia president also said contractors were told to retain Macau workers at the cost of LVS while the company was conducting an assessment as to what extent the 2,000 workers could be transferred to other projects, or engage in the management of certain works on Parcels 5 and 6 to preserve the existing works during the suspension.

“We expect that process to be conducted over the next one or two weeks,” he said.

“We are committed to giving preference to re-employ qualified Macau construction workers when we resume construction work,” he added.

However, at the same time Mr Weaver said it was “certain” that LVS would not be able to continue employment of all the 2,000 Macau workers as “there will not be sufficient positions in other existing projects”.

“We will continue to pay them their wages until the assessment of where we can re-employ or reallocate them is completed,” he added.

Although Mr Weaver said the company now had to concentrate on optimising the performance of the existing businesses in the SAR, there was a plan to increase sailings of CotaiJet.

“Ferries are like aeroplanes, they become more profitable as you achieve higher level of utilisation,” he said.

“Our plan is to move to a higher frequency schedule at 15-minute intervals,” he added.

However, the main obstacle to expand the ferry service was allocation of berths in Hong Kong, Mr Weaver said, and CotaiJet was also waiting for approvals to increase its sailings.

Despite the slowing of LVS development projects in Macau, the Asia president stressed that their commitment to the SAR in the long term “has not changed”.

“Our efforts to diversify Macau’s visitor base, drive overnight visitation, and increase the length of stay in Macau will continue,” Mr Weaver said.

“It remains our intention to build a critical mass of integrated resorts to facilitate Macau’s transformation from a gaming city to Asia’s premier destination for leisure and business travel,” he added.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: