UPDATE: Macau Rejects 1 SJM Cotai Request; Likely To Get Other Land 1st Quarter - Source
December 17 2010 - 7:00AM
Dow Jones News
The Macau government has rejected SJM Holdings Ltd.'s (0880.HK)
application for the same land Sands China Ltd. (1928.HK) was denied
earlier this month, leaving a key piece of land up for grabs in the
world's largest gambling market.
The government said in a letter to SJM that the operator's plans
to build a casino on Sites 7 and 8 didn't exempt it from a public
tender, a person familiar with the matter said Friday. Sands China
was told the same, people close to the situation said.
A spokeswoman for Macau's land department said Friday it had
rejected both operators' proposals and that a public tender could
be waived "when the concession is grounded in the public interest,"
namely developing Macau into a "world center for tourism and
leisure," but that even in that case, the grant would need to be
preceded by a public hearing.
However, SJM, which is controlled by gambling mogul Stanley Ho,
is likely to secure land rights for another plot of land on Cotai
in the first quarter of 2011, the person said.
The site is next to the Macau Dome and also next to land where a
company controlled by Angela Leong, the fourth wife of Ho and an
executive director of SJM, said it will invest MOP10.4 billion
(US$1.3 billion) in a family-oriented theme park and hotel resort
that doesn't have a casino. SJM is in talks with Leong to connect
the properties and share operating facilities, the person said.
The first-quarter timeline represents a delay from SJM Chief
Executive Ambrose So's earlier forecast. He said in September that
land rights for planned casino projects in Cotai would likely be
granted to SJM, Wynn Macau Ltd. (1128.HK) and MGM Macau by the end
of 2010.
The news comes after the government this week reiterated it
wouldn't approve new casino projects submitted after 2008, and also
said it would no longer grant land for casino projects without a
public tender once the new Land Law comes into effect.
The government's refusal to grant SJM rights to sites 7 and 8
without a public tender appears in line with its stated intention
to increase the transparency of the land grant system, which was
dealt a blow when Ao Man-long, Macau's former secretary for
transportation and public works, was found guilty in 2008 of
pocketing around US$100 million in kickbacks during his seven years
in the appointed position.
However, some question the government's commitment to really
improving the system. As the new land law, which the government
started revising in 2008, won't likely come into effect until 2012,
analysts say it is unlikely to affect the land grants for casino
projects planned by SJM, Wynn Macau and MGM Macau, now expected to
be awarded early next year.
The government is "taking too much time" to revise the law, said
Macau legislator Jose Pereira Coutinho. "Before the law comes into
effect, it's not appropriate to give land to the gaming
operators."
Meanwhile, Leong's land, on which she will build six hotels and
amenities such as shopping malls, amusement park rides, an indoor
beach and wave pool, theater and an equestrian center, was granted
ahead of the casino operators' land requests ostensibly as it is in
line with the public interest and Beijing's and Macau's calls for
Macau to diversify its economy away from gambling.
Leong, a member of Macau's legislative assembly, is also an
executive director of SJM Holdings Ltd. (0880.HK), Macau's largest
casino operator by revenue, and the head of the Macau Association
of Gaming Promoters--the middlemen who bring high rollers to
casinos. She acquired Macau Theme Park & Resort Ltd., which has
been awarded the land, after Chui Sai-cheong, the brother of
Macau's chief executive, left his position as a director of that
company this past summer, according to another person familiar with
the matter. Chui Sai-cheong claimed the valuable land since 2004
without building on it despite Macau's government urging those who
have land to develop it or risk losing it.
-By Kate O'Keeffe, Dow Jones Newswires; 852-2802-7002;
kathryn.okeeffe@dowjones.com