As many as 4,000 additional workers could lose their jobs in Macau as Las Vegas Sands Corp. readies more layoffs in response to the debut of City of Dreams, directly across from the company’s flagship, the Venetian, according the Michael Leven, the company’s new chief operating officer.
The company has already slashed more than 2,000 jobs from the peak of 20,000 positions last year, as it halted construction on its $12 billion Cotai Strip project.
Leven says most of the layoffs will center on foreign workers, and a base allotment of 13,000-14,000 workers is the company’s target.
“Macanese workers will be not affected that much; it will affect the expatriate population more so,” Leven said. “Some of those people are transferred to Singapore, some are no longer required, and some are redundant.”
First quarter results in Macau showed continued weakness in the market, and the opening of Melco Crown’s $2 billion City of Dreams, slated for June 1, will further dilute the market.
Gabriel Chan, a Hong Kong-based analyst at Credit Suisse Group AG, says the long-term future looks bright in Macau, but in the short term, companies must prepare for increased competition.
“We are more positive about growth in Macau,” he said, “but given there is more competition in Cotai, if the top line is not growing, you will have to cut costs.”
Meanwhile, the Wall Street Journal reported that the company has hired Goldman Sachs to create an initial public offering for the Macau properties. The move comes after failed attempts to sell parts of all of the Las Vegas Sands casino properties in Macau, according to the Journal.
Morgan Stanley gaming analyst Joe Greff, however, reported a sale of some or all of the company’s Asian properties is a possibility.
With a debt load of $10 billion, LV Sands needs to begin to prepare for the next maturity payment, not due until 2011. Greff said he was convinced during a lunch with Chairman Sheldon Adelson recently that “an asset monetization event in Asia is imminent.” Adelson had indicated that he had four potential partners, and talks were ongoing.
It had previously been reported that LV Sands was shopping for equity investors as well as selling such “non-core assets” as the shopping malls on Cotai Strip, condos in the Four Seasons hotel and the two remaining sites, which include the Shangri-La and St. Regis hotels, apartments, a casino and mall, on its Cotai land in Macau.
Adelson said that he’s also considering another bond sale, as the value of LVS bonds increased in mid-May.
Greff said one thing that probably will not happen (and Adelson agrees) is a sale or leaseback of Sands Macao, the company’s first Asian project.