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Capital Markets for Casino Projects Starting to Rebound

Cautious Optimism Expressed Regarding Future Development

By Richard N. Velotta, Las Vegas SunMcClatchy-Tribune Regional News

Oct. 05, 2011--Just as the economy is slowly rebounding, so, too, are the capital markets casino companies seek out to finance their projects.

While none of the financial experts on a Global Gaming Expo panel on capital markets Tuesday would predict when a new casino project would be financed in Las Vegas, they each expressed cautious optimism that things are getting better.

"They're all taking a pause now to make sure they're doing it right," said Dennis Bloch, managing director and group head of Wells Fargo Securities LLC.

He said public equity houses are being far more careful these days.

"Good deals can get done, but it depends a lot on the asset, the management and the capital structure of the deal," Bloch said. "When a project is on the edge and there's no flexibility (in financing), it's not going to get done."

Panel moderator Andrew Zarnett, managing director of Deutsche Bank Securities, said the debt crisis in Europe and concerns about the U.S. debt burden have cooled some of the enthusiasm markets have had. But it's a contradictory story in Asia.

"Asian banks appear ready to loan money for good companies," said panelist Rob Heller, managing director of UBS Investment Bank. "The money is there in public markets and people have seen what's happened in Macau and Singapore."

But the Asian success stories can't hide a couple of very visible failures in Las Vegas and Atlantic City. The $2.9 billion, 68-floor Fontainebleau is a hulking reminder of a project gone wrong on the Las Vegas Strip. The $2.4 billion Revel Atlantic City shut down construction in March 2009, but new financing has is expected to lead to its opening in May.

One matter the financial experts agreed on is that the rapidly changing economic environment has made it difficult for companies to secure financing during lengthy regulatory reviews.

"The windows open and close quickly," said panelist David Berman, senior marketing director for the gaming, lodging and leisure sector of Macquarie Capital. "Sometimes it's regulation that bogs things down."


(c)2011 the Las Vegas Sun (Las Vegas, Nev.)

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