Las Vegas Sands Still Awaits Decision - Tuesday 12th of April 2005
Las Vegas Sands Corp., owner of The Venetian, is still awaiting a decision on its request to reconsider a multimillion-dollar construction defect judgment against the company, but does not believe any final decision will hurt it financially, the company said in a regulatory filing.
Las Vegas Sands filed a notice of appeal to the Nevada Supreme Court regarding the denial of its post-trial motions following a $44.2 million judgment in June 2003 in favor of Lehrer McGovern Bovis over construction costs for the $1.6 billion Strip hotel.
The post-trial motions were denied in all material respects in June and July 2004 although several motions for reconsideration to the trial court have not yet been ruled upon by the state court judge.
"While there are pending subcontractor claims against the construction manager and us and related claims for indemnity by and against the construction manager, we believe ... that our liability should be limited to the amount of any final judgment which may be ultimately entered in the state court action," the company said in its annual report filed Friday with the Securities and Exchange Commission.
In addition to the Bovis construction litigation, Las Vegas Sands is involved in other legal matters, including an alleged breach of agreement to pay a "success fee" for receiving a gaming licence for its Sands Macau operations.
The company does not expect that final resolution of these matters will have an adverse impact on its financial position, results of operations or cash flows.
"While the state court's orders denying our post-trial motions could be viewed as increasing the possibility that we will be exposed to loss in this litigation, there are appellate issues that we intend to pursue and ongoing arbitration proceedings that we believe will impact the amount of loss and /or any award to which we may be entitled," the 10-K filing said.
A call to Venetian President and Chief Operating Officer Bill Weidner was not returned Wednesday. A Las Vegas Sands spokesman said executives were bound by SEC regulations not to comment on anything outside of what is reported in the 10-K filing.
Attorneys for The Venetian argued during a nine-month trial that many of the claims by Lehrer McGovern Bovis and its subcontractors were duplicative.
For example, the jury verdict includes an award of $8 million for trade contractor overtime incurred by the construction manager. An arbitrator found that the construction manager is entitled to nothing for these exact same overtime claims.
"We intend to seek an elimination or reduction of the construction manager's and its subcontractors' mechanic's liens in an amount to be consistent with any final judgment on the verdict," Las Vegas Sands said in the report.
The legal battle between The Venetian and Lehrer McGovern Bovis started soon after the hotel was completed in 1999. Subcontractors who had worked on the project filed more than $300 million in mechanics' liens for unpaid labor and material costs.
The Venetian claimed Bovis had breached its contract for a final guaranteed maximum price of $645 million. Bovis countered that any cost overruns were due to "scope changes," or extra work created by design and material changes requested by Venetian owner Sheldon Adelson.
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