MACAU BUSINESS I am surprised because it is not the cap on


tables that really makes the difference. What makes the difference is the number of places that are competing for the customer. When a customer comes to Macau, different


operators approach him. What counts is how many approaches he gets and how much marketing and promotion each property does to bring people to Macau. No customer knows how many tables are in each property and none of the customers care. Putting a cap on the tables may have the desired effect of limiting the number of places to bet but all the government really has to do is to limit the number of sublicenses [operations run by third-parties under the gaming license of one of the city’s six concessionaires, which in return is entitled to a fixed cut]. That is the problem. They don’t limit the


number of sublicenses. Stanley [Ho Hung Sun] has 60 VIP rooms and close to 20 sublicensed casinos. A casino by any other name is still a casino. I am very glad to see that the government has


finally said there is a matrix of non-gaming amenities that you have to provide in order to get the “golden ring”.


And you are bringing more non-gaming facilities? More than anybody, by far.


Enough tables


With parcels five and six, (now re-branded as Sands Cotai Central, a better name, by the way) opening next year, you need more gaming tables. How does the 3-percent cap impact Cotai Central? We have the tables. We grandfathered in because we started the project several years ago before they came up with this limitation.


I believe the government has already


allowed you 400 tables for Cotai Central. Was it less than an operator with this size of investment would expect? This is going to be the largest building ever built in the world, almost 1.3 million square metres. I respect the fact they want to limit


development. We just disagree [on the method]. There is more than one way to do it, rather than putting a limit on the number of tables. If they are trying to discourage people from


developing new properties, they could simply say “You cannot develop new properties”. That is all there is to do. We are correct in following the integrated


resort model with all the non-gaming amenities connected. I am going to write a letter to the


government suggesting there ought to be 24 DECEMBER 2011


something like 30 percent of the space in hotel rooms, 15 percent of the space should be for MICE [meetings and conventions] and of that, 10 percent should be exhibitions space and 5 percent congress space. Maybe 15 percent for retail, spas and showrooms etc. I am going to prepare a matrix that will show what percentage of space should be devoted to each separate amenity.


That comes to 60 percent. What about the other 40 percent? For other things. But the casino should be no


more than 5 or 10 percent of the total amount of space. Whatever number they come up and think is optimum. I do not think we need more than 5 percent. The developer that does not want to put up the [non-gaming] amenities, should be penalised by having the percentage of the casino in relation to the total amount of space reduced.


Fortunately, the government announced the table cap after Sands China Ltd. secured a US$3.7 billion (MOP29.6 billion) loan agreement. Do you think operators that wish to develop in Cotai might face difficulties in getting bank financing due to the new rules? Banks will not loan money without


assurances from the government that there will be sufficient equipment, approvals and labour to both construct and operate the resorts so that they have the best chance of getting the money back. At the last minute, there was enough demand [for the Sands’ loan agreement] and we took another few million dollars [US$200 million] just to have extra cash and consider paying dividends. We did not absorb all the available cash in the market by far. There is plenty of cash in the market and it is up to the credit worthiness of the applicants. But I talked to many banks and they say that without assurances that the operator will have sufficient equipment and labour, they are not going to loan any money.


Let’s sit and talk On parcels seven and eight, Sands China


Ltd. took the case to court after the government did a U-turn and decided not to grant you the plots anymore. Do you really think you can get them back? We have an obligation to our shareholders.


We are a public company and we have to pursue all the available avenues of appeal. If, in the final accounting, all the appeals are rejected, then we will be rejected. We have an obligation to protect the interest of the company. We obviously disagree with the government. There is no reason to take it back but I


understand what the government is trying to do. If we could sit down and have a discussion about how to resolve the matter, we would welcome that opportunity.


If the government doesn’t grant you the


sites, will you sue to try to get back the US$100 million-plus that Sands has already invested in them? I do not want to sue the government. I would


much rather sit down and amicably negotiate out a solution.


Have you already suggested that to the


government? Yes. I have given instructions for that to happen. I do not know exactly what happened. We are there together. I have changed the face of Macau for the positive. I do not want to fight with the government.


This is their country but I think there are


certain things that should occur. We call it grandfathering, meaning when you change a law, whoever is in the midst of taking certain steps, should be allowed to continue to complete whatever they are doing. Apparently not.


To finish on the sites, there is one parcel left, number three. Any concrete plans? We are ready to start it. There are some


answers that we need from the government before we could start it.


So the ball is in the government’s court? Yes.


Could the government say it is going to


take that site as well because you are not developing it? We own the site. We paid for it. It is a lot


different from seven and eight. [According to the land grant contract, Sands China Ltd. is required to complete the development of parcel three by April 2013].


Paying a dividend


You said recently that Las Vegas Sands Corp. might pay dividends to shareholders next year. Will Sands China Ltd. follow? Yes.


Stock market volatility has been huge and gaming stocks are no exception. Does it keep you up at night? No. I do not worry about that because I know


that over the long term this is like gaming. Over time, the live averages change in the house advantage. It all leverages itself. I know over so many years of doing business that everything is in cycles. It goes up and down. Everything is volatile.


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