Six bidders seen withdrawing from integrated resort race: Merrill Lynch - Monday 17th of October 2005

Six more bidders are expected to drop out of the race for the integrated resort project in Singapore, says investment bank Merrill Lynch.

The government is due to launch the request for proposals for the Marina Bay site by the end of next month and for the Sentosa site in the first quarter of 2006.

Merrill says the likely winners will be the largest capitalised listed companies with global operating experience.

And it singled out Genting as arguably having the most experience operating in the region.

Twelve bidders are still in the running to build Singapores first integrated resort.

But market watchers say not all of them will still be around when the government launches the request for proposals.

Some analysts expect a few bidders to drop out around the time of the RFP submission.

They say the costs of preparing for the final bid and the possible deposit required could deter them from proceeding further.

Merrill Lynch estimates the development cost to be at least US$3 billion for the Marina Bay project and US$2 billion for the Sentosa resort.

And the investment house says only well capitalised companies will have the financial muscle.

Sean Monaghan, Vice President, Equity Research, Merrill Lynch (Singapore), said: "We would view the likely candidates as being the largest capitalised listed companies because they have the access to capital necessary to build the resorts in the first place. And the final development that we expect to be built at Marina Bay and Sentosa."

"Also the largest gaming companies typically have experience globally of operating in different markets. And some of them have very good experience in the Asian markets. So there will probably be only six companies which we say would be in the running to be the primary candidates."

Although many of the casino majors have been building up their operations in Asia, Merrill Lynch singled out Genting for its extensive operating experience in the region.

Sean Monaghan said: "We would probably say that they have arguably the best experience out of most of the bidders in terms of the number of countries operating in the region. Not only do they operate land-based casinos but they operate a successful cruise industry. Apart from that they operate in other parts of the world historically they have operated in Australia. They operate CBD-based casinos."

Merrill Lynch says the winners must be prepared to pay a high-upfront cost due to the expected long term synergies to be derived from the regional portfolio.

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