Wynn Resorts has hired three banks to arrange $US1.25 billion of loans to double the size of its resort in Macau, the world’s biggest gambling market in terms of revenue, said two people with direct knowledge of the deal.

Wynn Macau and Wynn Diamond Suites

Wynn Resorts hired Bank of America, Deutsche Bank and Societe Generale to arrange the loans, which would trim its interest costs by replacing a $US764 million deal signed in 2005, the people said. The money would also fund expansion of the casino Wynn opened in September, the sources said.

Wynn is competing with Las Vegas Sands, the largest gaming firm by market value, for customers in Macau, where gambling revenue surged 23 per cent last year to 55 billion patacas ($8.88 billion).

High-rollers accounted for about two-thirds of that take, helping push the city past the Las Vegas Strip as the global leader. VIPs make up about a fifth of the market in Las Vegas, according to PricewaterhouseCoopers.

James Packer’s Asian join venture, Melco PBL Entertainment, is also building a casino project in Macau, the $US2.1 billion City of Dreams complex.

“It’s vital that Wynn expand its properties in Macau so that it can also benefit from the growing mass-market sector,” said Gabriel Chan, a Hong Kong-based analyst with Credit Suisse Group. “Wynn has done pretty well in capturing the high rollers because Wynn Macau offers more luxurious, upscale amenities that cater to VIP customers.”

Gamblers at VIP tables in Macau start their bets at a minimum $HK1000 ($158.44), according to the city’s gaming regulator. Wynn Macau would borrow in Hong Kong dollars and US currency for terms of five and seven years, said the people, who declined to disclose interest rates for the loans.

Executives of Wynn and the three arrangers were scheduled to meet other lenders in a presentation at Wynn Macau on April 12, the people said.

Steve Wynn wasn’t immediately available to comment.

The Macau casino, with 10,219 square metres of gaming space, helped Wynn Resorts more than double fourth-quarter revenue, the group said on February 27. In the three months the $US1.2 billion property yielded $US58.5 million, 37 per cent of Wynn Resorts’s total earnings before interest, tax, depreciation and amortisation.

The expansion, due to be completed in the third quarter of this year, will add 11,427 sq m of gambling space, along with a theatre and more retail and food outlets. Wynn Resorts also plans to build a new hotel, Wynn Diamond Suites.

Las Vegas Strip posted $US6.69 billion of gaming revenue in 2006, according to Nevada’s gaming control board.

Macau’s casino gambling will grow at 16 per cent a year to reach $US11.6 billion in 2010, accounting for 62 per cent of gaming revenue in the Asia-Pacific region, PricewaterhouseCoopers forecasts. The US market is projected to expand 6.9 per cent a year to $US74.5 billion in 2010.

Source | Bloomberg

Originally posted 2007-04-03 10:20:57.

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