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SCMP Reporter

Borrowing plans cut   to US$5b from US$7b
The Venetian Macao's massive expansion plans have been hit by the global credit crunch, with a proposed loan to the casino cut to less than US$5 billion from the original target of US$7 billion.
Market sources said banks' reluctance to lend in the current credit market  climate,  and growing concerns about an earnings slowdown in the gaming industry, meant the loan for the landmark gaming  complex would fall short.
Bankers had expected the company to have worked out details of the loan by the end of last month and completed the deal within a month.
Representatives from about 40 banks  visited the Venetian last month.
'The number [of banks visiting the site]  was more than expected, but they were concerned about intensifying competition in Macau and falling earnings  among casinos,' said  one  banker.
A Venetian spokesman declined to comment.
Casino revenues in Macau fell 3.1 per cent in the second quarter to 28.89 billion patacas, the first quarter-on-quarter decline since the market was liberalised in 2005, as mainland visitors reduced trips in the wake of a devastating earthquake in May and a sluggish stock market. The figure was up 47.6 per cent from  last year.
The large number of construction projects from local, regional and international gaming  companies and a heavy concentration on  luxury housing units  have been a cause of overcapacity concerns.
'I'm just not convinced of the demand in Macau when wealthy Chinese have so many options to buy elsewhere,'  a market observer said.
The  Venetian had set a rough funding target of  US$7 billion  this summer, but  lowered its goal to US$5.25 billion last month.  Since then,  sources said, the firm had lowered its expectations further and was likely to raise less than US$5 billion.
'That was a  big loan for this kind of market,' said a banker who has been involved in lending in Macau.
With credit markets freezing up because  of the subprime crisis, banks have not only pulled back on lending but are charging more for the loans  they do become involved in.
The largest syndicated loan in Asia this year was  US$3.85  billion, taken out by  the hotel-casino project Marina Bay Sands,  Dealogic said.
Sheldon Adelson, the magnate behind the Venetian, is also building the Marina Bay Sands in Singapore.
Five banks  - Lehman Brothers, Citi, Goldman Sachs, BOC International and Standard Chartered - would  arrange the Venetian's five-year  financing plan, sources said.
The company borrowed US$2.5 billion in May 2006 and a year later reopened the deal, raising the  loan to US$3.3 billion. The Venetian had US$247.2 million of the loan  remaining at the end of June, according to a filing dated August 11.
The new loan would refinance that and fund the construction of hotel and casino complexes including the Four Seasons Macau, and two hotels each with a casino run by Shangri-La Hotels  & Resorts and Starwood Hotels & Resorts Worldwide.
The Four Seasons will  have 400 high-end hotel rooms,  serviced apartments, a casino and  retail space. The other four hotels combined will contain 6,400 rooms, more than twice the size of the 3,000-room Venetian.  Construction costs are expected to total US$3.3 billion.
In the August 11 filing, the Venetian  said it had about US$4 billion of  the US$12 billion needed.



Venetian expansion  hits loan hiccup