Las Vegas Sands Corp.’s Hong Kong-listed Sands China Ltd. said the Macau government rejected the casino company’s application to develop the final two parcels of land in its China expansion plan.
Sands China has 15 days to apply for a government review, and 30 days to appeal to the courts in Macau to secure sites 7 and 8 on Macau’s Cotai Strip, according to a U.S. regulatory filing today. Shares of Las Vegas Sands slumped.
Billionaire founder and Chief Executive Officer Sheldon Adelson has restarted Sands’ mothballed expansion in Macau, the only part of China where casinos are legal. Construction has resumed on Cotai sites 5 and 6, and Sands also has rights over site 3, the next area it plans to develop with hotels and casinos. The rejected bid covers the last two parcels the company planned to develop in the world’s biggest casino center.
“With the Macau government getting more vocal/concerned about additional supply, we wouldn’t be surprised if the government sits on the land for the time being,” Steven Wieczynski, an analyst at Stifel Nicolaus & Co., said today in a client note.
Las Vegas Sands fell $2.17, or 4.2 percent, to $49.17 at 4:02 p.m. in New York Stock Exchange composite trading. Sands China was suspended at HK$17.40 in Asia trading.
“The company has received a letter and is considering its options as presented by the government,” Ron Reese, a Las Vegas Sands spokesman, said today in a phone interview.
Macau’s casino gambling revenue jumped 57 percent to 169.5 billion patacas ($21.2 billion) this year through November, boosted by visitors from China’s mainland.
Las Vegas Sands has done preliminary groundwork at sites 7 and 8, pending approval of the land concession. No development time line had been announced.
Sands operates the Sands Macao, Venetian Macao and Four Seasons casino resorts in Macau.
It is also building St. Regis, Shangri-La, Sheraton and Traders projects on sites 5 and 6, neighboring Venetian. Work on those had stopped in late 2008 during the financial crisis, when Adelson invested more than $1 billion of his family money into the company to eliminate bankruptcy concerns.
Adelson, 77, envisions Cotai developing as China’s Las Vegas Strip, and has said he wants thousands of hotel rooms and new developments to create a convention hub and attract more mass-market vacationers. Las Vegas-based MGM Resorts International and Wynn Resorts Ltd., and Asia’s Galaxy Entertainment Group Ltd. plan to develop casinos on Cotai.
Melco Crown Entertainment Ltd. opened its second Macau casino, City of Dreams, on Cotai in June 2009. Melco is a joint venture between Lawrence Ho, son of Macau’s original casino monopoly holder, Stanley Ho, and James Packer’s Crown Ltd., Australia’s biggest casino owner.
Wynn Resorts, owner of the Wynn and Encore casinos in Las Vegas and Macau, is “ready to begin” site work on a third Macau resort in the Cotai area, CEO Steve Wynn said on a Nov. 2 earnings call. The project will cost $2 billion to $3 billion and open in 2015, employing as many as 15,000 staff, he said.
Sands’ Las Vegas-based parent company operates the Venetian and Palazzo casino resorts and convention center on the Las Vegas Strip, a casino in Pennsylvania, and this year opened the Marina Bay Sands in Singapore, one of two casino resorts in the island nation.