Regal Hotels International Holdings has ended talks to construct a billion-dollar casino resort within Las Vegas Sands' Cotai Strip project and will try to push ahead with development of the site on its own.
Regal shareholders took the news badly, selling the stock down 9.1 percent to 70 HK cents Wednesday.
Las Vegas Sands did not respond to questions seeking comment.
The Cotai Strip was conceived as the Las Vegas Strip transplanted to Asia and remade as a monopoly.
The project has been plagued by a series of setbacks and encroachments since Las Vegas Sands chairman Sheldon Adelson unveiled partnerships in March with Regal and other companies to finance and manage six resorts.
The model under which New York- listed Las Vegas Sands would operate the casinos and conference halls in each resort and keep all gambling revenue for itself has been a sticking point with prospective investors.
Las Vegas Sands said recently it would take over financing for three of the resorts after the collapse of negotiations with Hong Kong-based Harilela Hotels and others.
Regal said only that its preliminary agreement with Las Vegas Sands expired Tuesday with unresolved issues remaining.
Regal intends to proceed with its resort since the company has already invested considerable time and effort on planning, it said.
Executive director Donald Fan suggested the company might seek bids to operate the resort's casino from the five approved casino operators in the enclave. This would mark a further erosion of Las Vegas Sands' commanding position on Cotai. Las Vegas Sands is already imperiled by the break-up of its partnership with Galaxy Casino, owned by Hong Kong-listed K Wah Construction Materials, and the success of Stanley Ho, the former monopoly gambling operator in Macau, in grabbing a site originally included in the Cotai Strip.
Ho, still the dominant casino operator in Macau, said this summer he also has another Cotai project in the works.
Hong Kong-listed eSun Holdings, which is developing hotels adjoining the Cotai Strip, also said last spring that it will solicit offers from casino operators.
Regal said it applied to the Macau government Tuesday for rights to the 618,000-square-foot site with an eye toward breaking ground by early next year and completing phase one by early 2008, slightly later than previously planned.
Regal is adding a 3D Imax theater and a 60,000 sqft nonprofit hotel training school to its development plan, Fan said, adding: ``We're hoping to hear from the government very, very shortly.'' Adrian Ngan, an analyst with BNP Paribas Peregrine, said the government is likely to allow Regal to proceed.
Antonio Jose Castanheira Lourenco, director of the government office overseeing Cotai's development, said previously that the government has given Las Vegas Sands control over only three lots, not including Regal's.
Fan put the price tag of Regal's resort at HK$3 billion, above his previous estimates of HK$2 billion to HK$2.5 billion.
Phase one of the project would include start on a 465,000 sqft Roman- themed shopping mall as well as a hotel, a 130,000 sqft casino and 100,000 sqft of showroom and theater space. Phase two, targeted for late 2009, would include two hotels and see the shopping mall completed. The three hotels would have a total of 3,950 rooms, 50 more than previously stated. Fan said the company still believes it can recover its costs within four to five years of opening and that it will be able to fund construction with proceeds from its Regalia Bay luxury housing project in Hong Kong and from hotel profits.
He estimates the resort will employ 5,000 once open and 10,000 during its construction.
Hong Kong-listed Far East Consortium International is the only other company to have reached a preliminary agreement with Las Vegas Sands to finance a resort, but has yet to finalize terms. It would build on a site controlled by Las Vegas Sands.
(c) 2005 The Standard. Distributed by Financial Times Information Limited
