Genting May Try to Re-enter Macau Market Again

Genting Singapore has fuelled speculation over a possible entry into the Macau market after discussions with MGM Mirage and after it announced a S$1.63bn (US$1.19bn) rights issue that it said will, in part at least, go towards possible future acquisition and investment plans.

Genting International may well have a better shot this time with the mot balled Resorts World@Macau project than the last attempt into the Macau market with Dr Stanley Ho’s Sociedad de Jogos de Macau which was quickly put to a halt by the Singaporean regulators.

The rights issue was announced to the Malaysian Stock exchange on Wednesday and will see the company issue over 2 billion shares at a price of S$0.80. It has been fully underwritten by lead managers DBS Bank and CIMB Bank.

Genting Singapore is 54 percent owned by parent group Genting and runs the international casino and integrated resort interests, including the soon-to-open Resorts World Sentosa and its UK casino operation.

The company added that 60 percent of the proceeds or over S$960m will go towards the “funding of future acquisitions and/or investments undertaken by the group, or joint ventures, strategic collaborations, or alliances in areas related to its principal business”.

The remaining 40 percent will go towards repaying bank borrowings.

In June, MGM Mirage chief executive Jim Murren conceded in an interview with the Wall Street Journal that his company had held non-specific discussions with Genting about “global marketing relationships, strategic ventures and partnerships”.

The comments were made in response to rumours which suggested Genting and MGM might come to an understanding over the latter’s Macau interests. This in turn was prompted by the long awaited conclusion from the New Jersey regulator that MGM’s partner in Macau, Pansy Ho, was not a suitable partner for a company with interests in New Jersey. MGM owns a 50 percent stake in the Borgata Casino in New Jersey.

Genting said at the end of August it was on track for a soft launch of its Singapore project in early 2010. This came with the announcement of Genting and Genting Singapore’s second quarter results which showed a “weaker luck factor” at the parent company’s Highlands Resort in Malaysia causing net profits to fall 14 percent to US$95.6m.

Genting Singapore has benefited from a healthy rise in its share price this year, rising over 50 percent since January to its current level of S$1.19. The parent company’s share price has also risen in recent months from a low of around US$0.90 in late March to its current level of US$1.99.

OCBC analyst Casey Wong told the Wall Street Journal yesterday: “The Singapore casino is well funded, so it seems Genting is only taking opportunity of the strong run-up of its shares recently. It’s a good assurance to have some money in the bank.”

He added that Macau might well be in Genting Singapore’s sights.

Originally posted 2009-09-11 05:40:40. Republished by Blog Post Promoter

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