GGRAsia – MBS expansion to cost above US$3.3-bln pledged in 2019

MBS expansion to cost above US$3.3-bln pledged in 2019

Aug 22, 2023 Newsdesk Latest News, Singapore, Top of the deck

The parent of Singapore casino resort Marina Bay Sands (MBS) says its expects costs of an expansion project agreed with the country’s authorities in April 2019 will “materially exceed” the SGD4.5 billion (currently US$3.32 billion) amount mentioned at the time.

The 2019 deal between the group’s local unit Marina Bay Sands Pte Ltd and the Singapore Tourism Board (STB) – coinciding with the city-state’s authorities announcing the casino duopoly there would continue until 2030 – mentioned a spending pledge for extension work at Marina Bay Sands amounting to SGD4.5 billion. The other half of the Singapore duopoly is Genting Singapore Ltd’s Resorts World Sentosa complex. That firm has also pledged to spend SGD4.5 billion on expansion work.

But Las Vegas Sands Corp said in its half-year report, issued on Monday, that it expects its own total project cost “will materially exceed the amounts… from April 2019 based on current market conditions due to inflation, higher material and labour costs and other factors.”

The three years of the Covid-19 pandemic disrupted the timetable and planning for the extension work. In March this year, Marina Bay Sands and the STB struck a supplemental agreement, which extended the construction start date to April 8, 2024 and the construction completion date to April 8, 2028.

The revised terms also allowed for changes to the construction and operation plans.

“The estimated cost and timing of the total project will be updated as the company completes design and begins construction,” said Las Vegas Sands in its Monday filing.

It said the group had already “incurred approximately US$1.07 billion” in costs for the extension as of June 30, “inclusive of the payment made in 2019 for the lease of the parcels of land underlying the Marina Bay Sands expansion project site”.

The plans aired at the time of the April 2019 agreement mentioned an additional hotel tower.

The new tower is to have “luxury rooms and suites”, and there would be “a rooftop attraction, convention and meeting facilities and a state-of-the-art live entertainment arena with approximately 15,000 seats,” Las Vegas Sands reiterated in its Monday filing.

“We are in the process of completing the design and reviewing the budget and timing of the Marina Bay Sands expansion due to various factors,” added the group.

As a result, the construction cost estimate and construction schedule “were not delivered” to the group’s relevant lenders by an extended deadline of March 31, 2022.

Las Vegas Sands stated, that as a consequence, “we will not be permitted to make further draws” on its Singapore delayed draw term facility “until these items are delivered”.

The casino group added: “We do not anticipate material spend related to the Marina Bay Sands expansion project prior to the delivery of these items to lenders”.

The half-year report also mentioned an ongoing US$1.0-billion renovation of hotel rooms at Marina Bay Sands.

This would “introduce world-class suites in Tower 1 and Tower 2, and substantially upgrade the overall guest experience for premium customers,” stated the company.

“This project is in addition to our previously-announced plans for the Marina Bay Sands expansion project and is expected to be completed by the end of 2023,” said the casino group.