Tuesday, November 11, 2008

Best. Bailout. Ever!

Macau's government decides to save a strategically important industry: casinos. Now they really are taking a gamble with public money; shovelling it into a hole in the ground. Etc.

There's actually an interesting sidelight further down the story. It regards Sheldon Adelson, the casino boss who funded Freedom's Watch, a creepy rightwing campaign group established to "support the surge" which everyone expected to be much more important in the campaign than it turned out to be. Now, almost a month ago, Felix Salmon blogged that Adelson was in financial trouble. He's committed to huge spending on building casinos on a range of sites he bought (expensively) around the world. This wasn't such a problem when the shares in his company were soaring; but now they're tanking. They went from $80 in March down to $11.

And it's getting tough to borrow, especially as his only source of cash flow is the original casino back in Las Vegas. In October, the firm had $11bn in debts and less than $1bn in cash. I wondered at the time if Adelson didn't have the cash to back his political smear campaign; now, looky here. In the FT story, it mentions that his firm recently managed to raise some more money in an issue of $2bn worth of bonds; but apparently, one of the buyers was Adelson himself, whose net worth in October stood at $11bn. But he's almost certainly lost much, much more since then; perhaps half that. Since October, the shares have lost a further two-thirds of their value.

Now, this FT story shows that he ponied up $475 million to keep the firm going at some point before the 6th of November. But the latest story suggests he's forked over even more, which suggests he may have parted with as much as 20-30 per cent of his money during the last leg of the election campaign.

It seems quite possible that Freedom's Watch just ran out of cash.

Update: Adelson ponied up another $525 million to back a new share issue of $2bn, on terms which mean he goes down to 50% control of the firm. So yes, he's had to pay up between one-fifth and one-third of his money. Further, johnf points out in comments that he's a big donor to the Likud and a pal of Benjamin Netanyahu, so the prospect of a distributed wanker drought cannot be ruled out. It's a pity for the 11,000 construction workers who he laid off in Macau this week as part of the casino panic plan.

1 comment:

Anonymous said...

He's also a very big funder of Likud, a personnal friend of Netanyahu, and founder and funder of a major Israeli rightwing paper.

Likud could likewise suffer from lack of puff in the coming elections.


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