US gaming firms could sell float assets in Macau
Posted by Andy Banks on 12 Jun 2009 at 11:06
Some of the biggest names in gambling in America could be looking to sell assets in a Chinese gambling enclave in order to get over a slump in business in Las Vegas.
Reuters reports some casino operators in the US facing big debts are looking for the first signs of recovery in Macau to tempt investors who have had a rough ride in terms of gambling stocks over the last 12 months.
According to the Reuters report, sources have said Wynn Resorts could reveal an initial public offering for its interest in Macau in what has been suggested could be a $2 billion -plus offering.
Reuters also reports Las Vegas Sands could get in on the the act, and could be considering an initial public offering of its division in Macau.
There has also been speculation that MGM Mirage could end up selling its stake in a joint venture in Macau. The Malaysian Company Genting recently bought a multimillion dollar stake in the company and has been listed as a potential buyer.
The Las Vegas market has been struggling of late, which has be impacting on the overall operations of some of America's biggest casino companies.
Quoted by Reuters, Adam Rosenberg of Goldman Sachs said: "What I think is driving the speculation at this moment is the financial distress that a lot of the parent organisations standing behind some of the assets in this market are facing.
"As they've said, they're considering all alternatives to deal with their operational and financial situations."
Macau has been as hard hit by the global financial slowdown as any other gaming destination, but there have been recent signs players are returning to tables and confidence is back in the boardroom.
Recently the City of Dreams, a huge new mega casino project opened in the territory, putting the spotlight back on the sector.
Macau has also faced concern that visitor numbers could drop off after the Chinese authorities restricted visa conditions for people wishing to visit the enclave, although there are now hopes there will be ways around the rules for many gamers.
Reuters also quoted Andrew Zarnett, managing director at Deutsche Bank Securities, as saying: "The capital markets are presenting an opportunity,"
"It's temporarily open, which means there's something to be done."
Although the share prices of many American gaming operators have recovered recently after falling to significant lows in march, they are still not at the prices seen in recent years.
Reuters added some experts have been saying raising equity to cut debts could be one of the most effective ways for casino companies to avoid breaching loan covenants.
Some American companies have already raised cash by taking measures such as selling stocks in the US, but attention has swung to Macau recently as it appears to be set for a quicker recovery than parts of America, including Las Vegas.
Wynn Resorts was planning to announce a Hong Kong listing but delayed this when the global financial crisis arrived last year, bankers have said according to Reuters.
The likes of Genting have been considering Macau for some time, according to some experts, even though the territory's asset opportunities are limited and there are only six gaming licences up for grabs.
Analysts have said that the Malaysian-based company could be the most likely to be able to buy MGM's stake in the region.
Speculation that Genting could make its move followed the company's recent investment of $100 million in MGM shares.
Back in may MGM revealed that the New Jersey division of gaming enforcement recommended the company "disengage itself" from its partner in Macau, Pansy Ho, daughter of Casino mogul Stanley Ho.
CLSA analyst Aaron Fischer was quoted by Reuters as saying this might mean either Ms Ho or MGM has to "exit the partnership" in Macau.
Sanford Bernstein analyst Janet Brashear, was also quoted by the news agency, saying MGM would "relish" the chance to leave Macau.
