Resorts' operating cash flows will be used to fund the extra investment
(SINGAPORE) Genting International has announced that Resorts World at Sentosa is now expected to increase its investment in the integrated resort (IR) to $6.59 billion, up from $6 billion.
In a statement released yesterday, it added that the additional investment will be funded by operating cash flows from the IR when it opens in the first quarter of 2010. 'Financing for the resort is in place with the successful syndication of a $4 billion credit facility in April 2008. As at 31 December 2008, Resorts World at Sentosa Pte Ltd has awarded more than $4.5 billion of the $6.59 billion project costs,' it said.
First to open will be four hotels, the casino, Le Vie Theatre, a 7,300-seat ballroom, and Universal Studios Singapore.
Resorts World's chief executive officer Tan Hee Teck added that to date, it has drawn down $600 million of its credit facility. One third of the IR was funded by equity. About $2 billion has been set aside for interest costs and pre-operating costs.
At the time of opening, capital expenditure is projected to be less than $6 billion.
Mr Tan said that the increase in investment is due to changes made to the design and architecture of the integrated resort to improve its entertainment offerings, including enhancements to its casino and Universal Studios Singapore.
Of its Universal Studios attractions, 18 out of 24 are new or have been redesigned for Singapore.
Improvements were made to the quality of interiors as well as to foot traffic accessibility to retail and dining outlets.
The last time the budget for the Sentosa IR was revised upwards was in November 2007 - from $5.2 billion to $6 billion. This was attributed to building-cost escalation and more attractions being added.
The budget for Las Vegas Sand's IR, Marina Bay Sands, has also been increased from US$3.6 billion to about US$4.5 billion.
While construction costs are said to be coming down this year, Mr Tan said that it would only benefit from contracts signed within the last two months.
The announcement comes on the back of Genting International's full year financial results which saw it register a 14 per cent fall in revenue to $643.8 million, down from $751.6 million a year ago.
This was attributed to lower revenue from the group's UK casino's operations and lower interest income. Genting said that revenue from the UK casinos's operations was affected by the weakening of pound against the Singapore dollar and lower business volumes.
It also reported a net loss of $124.8 million for FY2008, compared with a net loss of $381.5 million for FY2007. This can be largely attributed to a lower impairment loss on goodwill recorded in the current financial year for the acquisition of Genting Stanley of $100.8 million compared with $454.6 million in the previous year.
For the year, it also said that the UK casinos's operations recorded a loss before impairment, foreign exchange losses and interest expense of $12.5 million compared to a profit of $53.4 million in 2007.
Mr Tan, however, is confident of the success of Resorts World at Sentosa as more cost-conscious Asian holiday-makers are travelling within the region. He said: 'Asians are telling us they are doing medium to short-haul flights now.'
Source: Business Times , 20 Feb 2009