GGRAsia – GEN Malaysia seeks US$472 mln via GEN HK stake sale

GEN Malaysia seeks US$472 mln via GEN HK stake sale

May 12, 2015 Newsdesk Latest News, Rest of Asia, Top of the deck

Casino operator Genting Malaysia Bhd could raise at least US$472.2 million gross from the proposed sale of its entire 17.81 percent interest in casino ship operator and Philippines casino investor Genting Hong Kong Ltd.

Genting Malaysia said in a filing to Bursa Malaysia on Monday that the stake is held by Resorts World Ltd, an indirect, wholly owned subsidiary of Genting Malaysia.

The potential gross raised assumes disposal of all the 1,431,059,180 Genting Hong Kong shares held by Resorts World, at a minimum disposal price of US$0.33 per share – equivalent to MYR1.18 per unit.

Disposal at the minimum price would however represent a loss to Genting Malaysia, which paid US$604.1million for its Genting Hong Kong stake, at an average purchase price of US$0.42 per share, between 1998 and 2006, according to the filing.

Genting Malaysia said some of the money raised might be used to redevelop the firm’s Malaysian casino and entertainment venue, Resorts World Genting, under what it referred to as the “Genting Integrated Tourism Plan” (GITP), a 10-year refurbishment programme announced in December 2013.

There is also an expansion planned for its 70 percent-owned Resorts World Bimini casino resort in the Bahamas, although that wasn’t mentioned in the filing.

“The proceeds arising from the disposal may be used to partially fund the GITP as well as any future investments and/or used for working capital of the Genting Malaysia Group,” stated the filing.

The valuation of Genting Hong Kong’s shares at between US$0.33 and US$0.45 per unit was ascribed by Morgan Stanley Asia (Singapore) Pte as an advisor to the Genting Malaysia board.

At the close of trading in Singapore on Monday, Genting Hong Kong’s Singapore-listed shares were valued at US$0.37 each, according to exchange data. At close of Hong Kong trading its Hong Kong-listed shares were worth HKD2.82 (US$0.36) per unit.

The disposal mandate on the shares will be valid for one year from the date of approval by an extraordinary general meeting of Genting Malaysia shareholders. A date is yet to be set for such a meeting.

Genting HK

Genting Hong Kong runs casino cruise operator Star Cruises Ltd. It is also an investor alongside Philippines conglomerate Alliance Global Group Inc in Travellers International Hotel Group Inc. The latter developed and operates the still expanding Resorts World Manila casino resort near Manila International Airport. Travellers International is also investing in a second Manila casino resort – the US$1.1-billion Resorts World Bayshore, which is due to open in 2018.

Pending the utilisation of the proceeds from the Genting Hong Kong share sale, Genting Malaysia intends to place the cash in interest-bearing bank deposits and or money market financial instruments.

Genting Malaysia said the disposal shares are considered non-core investments and are treated as “available-for sale financial assets” in the group’s financial statements.

It added that the disposal is not expected to have any effect on the issued and paid-up share capital and substantial shareholders’ shareholdings of Genting Malaysia.

The exercise is however expected to increase the earnings and earnings per share of the Genting Malaysia group in the financial year the disposal takes place as it is expected to realise a one-off gain on disposal based on the minimum price.