Macau’s Ho answers American
challenge with glitz

Feb 13, 2007 4:23 AM

Looking to reverse his recent market share loss to those "Las Vegas" interlopers, Macau gaming mogul Stanley Ho Sunday opened his new Grand Lisboa casino to rave reviews.

The 85-year-old Hong Kong resident, who dominated Macau legal gambling for four decades before the law was changed in 2002, had a reputation of operating slimy, smoke-filled gambling dens.

But Sunday, he unveiled his flagship casino, a $384 million five-story property that is shaped like a giant lotus flower. This upscale facility joins 16 other gaming properties that Ho owns and operates in the former Portuguese enclave that has become a gambling haven for the people of China.

At the opening, Ho promised the casino would be a "vibrant" and "comfortable" place that would represent the "real Macau."

"The Grand Lisboa combines the best of our heritage with the world’s latest technology," Ho was quoted as saying as ballet dancers and gold-suited acrobats dangled from huge balloons.

As for the loss of market share, Ho said that his 63% share of Macau’s gambling market was really good considering the number and size of the competition. He had accused his American competitors (Las Vegas Sands and Wynn Resorts) of unfairly poaching his staff and stealing away some of his high-rolling customers.

Not mentioned at the Grand Lisboa opening was another competitor, the StarWorld Casino Hotel operated by Hong Kong’s Galaxy Entertainment Group Ltd.

John Au, senior vice president of StarWorld, said that his company has a 22% market share in Macau in January and that he expected that number to rise to 25% by the end of 2007.

StarWorld is fifth Macau casino operated by Galaxy Entertainment.

Financing plan

In order to raise money to assist in financing the takeover of Harrah’s Entertainment Inc. (HET), the purchasers — the private equity companies Apollo Management and Texas Pacific Group — plan to separate its real estate assets into separate subsidiaries.

According to a filing with the Securities and Exchange Commission, the acquiring groups said they would invest $5.87 billion in cash and borrow the rest under various credit facilities and mortgage loans on the real estate.

The $92 per share takeover bid, accepted by Harrah’s board of directors, will result in a purchase price of $17.1 billion.

Harrah’s Entertainment, operator of 47 gaming properties around the country, said its real estate holdings represent about a third of the company’s earnings. In a bond sale managed by JPMorgan Chase, the real estate company will borrow $7.25 billion using the land as collateral.

THE INSIDER: Penn National Gaming Inc. (PENN) says that because of higher construction costs, the price of its Hollywood Slots’ permanent racino in Bangor, Maine, has risen to $131 million from the original $90 million.