p14-20 Macau 16/1/09 08:26 Page 14
MACAU BUSINESS
Sitting pretty
They came with a canny investment on
by Paulo A. Azevedo and Luis Pereira
a prime piece of golf course land on
the Cotai Strip and now feel they are
well poistioned amid the chill of the
global economic meltdown. Harrah’s
CEO Gary W. Loveman tells Macau
Business why he wishes they’d been
able to enter the enclave’s gaming run
when all the others did
H
arrah’s had some success about the economic crisis
refinancing its US$500 million for the gaming industry?
short-term debt with private For a very long time the
equity companies Apollo Global industry has engaged in
Management and TPG Capital. competition largely through
Operating cash flow and private equity was capital. Whatever you build,
king in a lender’s decision to sign off a I’ll build something bigger
cheque, but now they’ve closed the tap. and more expensive and the
What are your plans for long term next guy will build something
refinancing of the $24 billion? even bigger.
The returns of capital in the
Gary W. Loveman - Our company is fully industry over a very long
financed, indefinitely. We don’t have any period of time have been
unfunded capital requirements, unlike some quite low. In certain cases not
companies you see here [in Macau/ Cotai] even equal to the cost of
where they have massive projects to finance – capital, and that recently
we’re not in that position. When we closed our reached a fever pitch here
privatisation in January we had the company with mega projects in Macau.
financed for the indefinite future. We continue It also happened in Vegas in
to be in a very good position. The earlier the United States - even in
maturities we have are due in 2010 and 2011, some secondary markets
and we just have to position ourselves to be where very large investments
able to pay those when they become due – have achieved very low returns
that’s been our intention all along. We initiated early on – and in some cases are likely to build and so far has generated one million in
an exchange note offer, which is an exercised experience very low returns –because of the the first nine months.
trade debt instrument with existing holders but absolutely massive amount of money that was
we had made preparations to make sure we spent on them. What on earth could persuade an
paid those notes in advance. For reasons that are still not clear to me, institutional investor to throw its money
banks and other credit suppliers were willing to away?
Massive amounts lend enormous sums into very uncertain I’ve heard of bankers that love a project but
projects. don’t like the casino that creates. Everybody is
You’ve been quoted saying that the enthusiastic about the development; they just
gaming industry will have to change the way Can you be more specific? don’t like it once it’s over. A development is an
they do business. What does your City Centre, Echelon Place, some of the interesting thing, you can have pictures of it,
background in the Federal Reserve Bank and projects here in Macau. Another is St. Louis you can describe it, you can tell everyone how
your Ph.D. in economics from M.I.T. tell you called Lumière that cost US$500 million to beautiful it is. The day it opens it actually has
14 FEBRUARY 2009
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