Govt bailout for failing casino?

The TODAY newspaper has raised the prospect of a government bailout for a troubled casino operator which is building its showcase “integrated resort” in Marina Bay.

The Financial Times reported that shares of Las Vegas Sands fell more than 40 per cent after the casino operator warned that it risked defaulting on its debt, raising doubts about its ability to continue operating as a going concern. The Sands is reportedly struggling to meet its debt obligations.

The casino operator said that failure to raise new capital would trigger a series of defaults, raising a “substantial doubt about (its) ability to continue as a going concern”.

In a bit to assure the Singapore Government, Sands chairman and chief executive Sheldon Adelson this week met with the government officials to “personally reaffirm our commitment to the success of Marina Bay Sands”.

Adelson issued a statement, saying: “I am pleased to say that the Singapore Government’s support of our project remains strong.”

Of course the Government’s support remains strong! As a gaming analyst told TODAY: “There is no doubt in my mind the Singapore Government will come in to ensure the project is completed.”

PAP MP Ho Geok Choo was even more frank: “The Government has placed a huge stake of its reputation on this project because we went loud and clear when the decision to have casinos here was made. We obviously attach a lot of importance to seeing it through.”

TODAY reporter Teo Xuanwei wrote that some observers expect it to apply an infusion of case or assume a chunk of the casino operator’s debt, possibly through its investment arms.

Investment arms? Does she mean Temasek or GIC?

You mean there’s a possibility that the Government is going to use our reserves to bail out a casino operator just to save face?

I am strongly opposed to such a move, and even more so if it is done secretly without informing the public (which Temasek and GIC could very well do).

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.

11 thoughts on “Govt bailout for failing casino?”

  1. If the Gov is going to ‘bailout’ the IR… i believe this will be the first Singapore financial bailout for an ‘affected party’in the financial crisis.

    Does it mean that Singapore investment companies will do will direct investment into the IR which means a greater stake in the IR or a loan?

  2. With reference to this statement “because we went loud and clear when the decision to have casinos”.

    It means that they do not want to look stupid to the world. It is to save face, first and foremost and spending any amount of money to do that is secondary.

    So much for the A-Team.

  3. The stake is high because the 3 local banks are lenders for the project and of course our local contractors and sub-contractors, suppliers etc… Many companies and people will go into huge debt if the project don’t make it. Hence, the gov will surely take over via the GIC or Temasek holding.

    The bigger question is what will happena after the project completion…. another white elephant?

  4. It is probable that the Govt will have to bail out the operators to ensure success. If the IR project fails,sporeans will experience economic hardship directly & indirectly. If Sands sinks, I think another operator will be invited to step in/take over with or without Temasek as a partner. As a last resort, if no suitable party can be found then the govt may just assume ownership. failure is not an option. Success is not going to come cheap.

  5. er… the ping pong game just begins.

    CapitaLand says no casino talks with Las Vegas Sands

    CapitaLand wishes to clarify that no discussion has transpired between itself and Sands,” it said in a statement.

    “In the present continuing global recessionary environment, it is strategically watching the situation and studying opportunities related to distressed companies or assets, in Singapore and other core markets,” CapitaLand said.

    CapitaLand is 40 percent owned by Singapore sovereign wealth fund Temasek Holdings [TEM.UL].

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