Marina Bay Sands (MBS) operator Las Vegas Sands says that it does ‘not expect to be able to timely commence’ numerous construction projects under its Second Development Agreement with the Singapore government, as the deadline for commencing the projects is set for April 2023.
The group notes that it is ‘in discussions with the Singapore government on the duration of the timeline extension for commencement and completion of the expansion of Marina Bay Sands,’ but that ‘if such extension is not obtained, we will be in breach of our obligations’.
The worst-case scenario of such a breach is that the company ‘could lose our right to operate the Marina Bay Sands and our investment in Marina Bay Sands could be lost’.
The terms of the Second Development Agreement also contain ‘restrictions limiting the use of the Land to the development and operation of the MBS Expansion Project’, as well as requiring MBS to obtain approval from the city-state’s tourism board ‘in order to subdivide the Land or any building thereon’.
In addition, given a review of the budget and timing of the MBS expansion project, the group notes that ‘the construction cost estimate and construction schedule were not delivered to the lenders by the expected deadline’, referring to the loan it had secured, the ‘Singapore Credit Facility’ to construct the project.
Given that the cost estimate and schedule weren’t delivered on time, the group notes that ‘we will not be permitted to make further draws’ on the loan ‘until these items are delivered’.
The Second Development Agreement pledges an investment of some $3.3 billion, for the construction of a new hotel tower with 1,000 rooms and suites, MICE facilities, a 15,000-seat arena and a ‘rooftop attraction’ – namely a rooftop swimming pool, with investment to be completed within eight years of the effective date of the agreement – April of 2019.
The group is also undergoing a $1 billion renovation of MBS, namely to introduce ‘world-class suites in Tower 1 and Tower 2 as well as upgrading ‘the overall guest experience for premium customers’.
Failure to negotiate a new agreement with the city’s tourism board could also mean that MBS could miss out on some of the perks under the Second Development Agreement, namely the addition of 1,000 gaming machines and the option to purchase additional gaming space. Some 500 of the gaming machines were released for MBS’ use in 2019.
In response to AGB enquiries, a spokesperson for MBS noted that the company ‘had no further info to provide’ beyond what it had already listed in its most recent annual results, where it referenced its likely inability to make the deadline.
In addition to the above, amendments to the city’s Casino Control Act require that applicants or renewals of casino licenses must be ‘a suitable person to develop, maintain and promote the Integrated Resort as compelling tourist destination that meets prevailing market demand and industry standards and contributes to the tourism industry in Singapore’.
A panel assesses applicants and reports back to the Gambling Regulatory Authority (GRA).
Marina Bay Sands’ casino license was last renewed by the GRA in April of 2022 and is set to expire in April 2025.