The New York Racino: Surviving the Competition

I am really neutral on this.

The latest Bloomberg  report tells us that Genting Malaysia Bhd, is the only surviving bidder for an electronic slot-machine parlor at New York City’s Aqueduct Racetrack after two US-based firms were disqualified, the New York Lottery announced.

One excluded proposal was submitted by a group led by SL Green Realty Corp, Manhattan’s biggest office landlord, in a bid with partners Hard Rock International and Toronto-based Clairvest Group. The other was from Wyomissing, Pennsylvania-based Penn National Gaming Inc, which operates 19 casinos and racetracks.

“The proposals did not conform with the requirements of the competition and, instead, attempted to negotiate for terms more favorable to the bidders,” Lottery Director Gordon Medenica said in a statement. Neither New York-based SL Green nor Penn National will be eligible for reconsideration even if Genting isn’t approved, he said.

The project, called a racino, would include more than 4,000 video slot machines plus a hotel and other facilities located at the racetrack for thoroughbred horses in the New York City borough of Queens. The developer of the project, which has been planned for nine years, would pay a minimum US$300 million up- front fee to the state, which would issue US$250 million of bonds to help finance the facility, according to budget documents.

Lottery Evaluation

The Lottery’s evaluation of Genting’s bid will continue, and it is not guaranteed the award, even though it is the only remaining bidder, said Jennifer Given, a state spokeswoman. The Lottery expects to announce its recommendation by Aug. 3, she said. The winner must also be approved by the governor, the president of the state Senate and the speaker of the Assembly.

The Lottery’s announcement listed 19 aspects of the SL Green proposal that were called “non-responsive” by the Lottery. The Penn National proposal was disqualified on eight counts.

Genting Malaysia, based in Kuala Lumpur, said July 1 it will buy the UK casino businesses of Genting Singapore Plc for £340 million to expand overseas. Both companies are controlled by Genting Bhd., which has holdings in hotels, palm oil plantations and cruise lines.

Spokesmen for SL Green and Penn National couldn’t be reached for comment.

New Low for Lohan

It was a new low for Linsay Lohan when she was sentenced to 90 days imprisonment today for violating her parole of not attending alcoholics rehabilitation classes.

From a meteoric rise, she is now in the dumps. Yet another fallen princess of the silver screen.

Electrical Wonder!

So, it is mid-July now? Hmmmmm.....

And so it would seem.

The Electric Train Service (ETS) which will reduce travel time between Ipoh and Kuala Lumpur to just two hours from three hours previously, is expected to be fully operational by mid July 2010.

Keretapi Tanah Melayu Berhad (KTMB) president Dr Aminuddin Adnan however, did not reveal the exact date of the launch of ETS.

“We are targeting professional groups and businessmen, besides the regular users of public transport, to use the service.

“With a speed of 140km/h, ETS will definitely reduce travel time, and the service of stewards and stewardesses will also provide comfort to passengers.

“In future, we will also provide wi-fi facilities in the train and we are in the midst of getting the right service provider,” he told Bernama in an interview here yesterday.

Eventually, he said, the ETS would also be expanded to Seremban.

Aminuddin said there were five ETS trains which would provide eight return trips for the Kuala Lumpur-Ipoh route daily, with the first train leaving at 5am and the last, 11pm.

On the fare, he said, KTMB was still waiting for approval from the transport ministry, adding that it was expected to be between RM30 and RM35 per trip.

Dr Aminuddin said KTMB had prepared an organised maintenance system for the ETS to ensure that it would not face similar problems as its existing train services.

“It is easier to maintain the electrical system with an organised maintenance plan. We hope to be able to provide an efficient and hassle-free train service, as compared to the commuter and inter-city train services,” he said.

He said each ETS train was also equipped with close-circuit television cameras to monitor the safety of the passengers, besides having the capacity of 350 passengers per trip.

Watch The Camera!

Think you can get away with doing  silly things?

Not today-with camera technology.

Here, a World Cup player get caught in 'his action!"

And here we see Diego Maradona, the Argentinian coach, 'fiddling ,diddling and dribbling" too.

BNM's Last Rate Hike?

Come 8th July, we will know whether Bank Negara [BNM] will hike rates again once more or call for a momentary halt.

A Reuters report postulates that  BNM may raise rates for the third time in five months after strong economic growth in the first half, but it could be a close call, with many analysts believing it will keep rates on hold due to fears of a global slowdown.

Nine out of sixteen analysts polled by Reuters expect a rate hike of 25 basis points to 2.75 per cent at a policy review on Thursday, while the remaining seven expect a pause.

Most of the economists who expect a hike in two days time do not see any more tightening for the rest of the year.

Of those who see no changes in rates this week, two said the central bank was already finished for the year, while three predicted it would bump up rates in September.

Malaysia last month raised its full-year economic growth forecast to 6 per cent from 4.5 to 5.5 per cent after gross domestic product (GDP) expanded by 10.1 per cent in the first quarter from a year earlier, its fastest pace in 10 years.

Export growth in April and May, however, have moderated compared to first quarter numbers and this may impact second-quarter economic growth. The central bank has said that domestic factors would drive policy considerations.

Uncertainties over the euro zone recovery and fears the US economy may be losing steam may also influence Bank Negara’s decision, with some economists saying that weak US economic data recently has lessened the chance of a domestic rate rise.

Late last month, Malaysia’s central bank governor said inflation was not a concern.

JULY HIKE, LAST OF THE YEAR?

After two, 25 bps rate hikes in March and May, Bank Negara will decide if it should further nudge rates to a more “normal” setting.

Economists consider that 2.75 per cent would be the normal rate for Bank Negara, while remaining accommodative to further growth, giving policymakers the opportunity to pause for the rest of the year to review the impact of the earlier tightening.

It cut rates by a total of 150 bps during the global financial crisis, from 3.5 to 2 per cent.

Domestic demand may remain firm as imports of consumption goods have been strong. In contrast, export growth has moderated, but some easing had been expected going into the second half.

Bank Negara has also downplayed any fallout from the euro zone debt crisis, although investors will watch its references to the global economic situation for clues on whether rate rises have ended for now, or if they will continue.

Probability: More likely.

Market impact: Both the ringgit and bond markets stand to gain from another rate hike as foreign investors would continue buying into government bonds, betting on more ringgit gains.

In June alone, 5-year government bond yields dropped 7 basis points while the ringgit appreciated by 1.2 per cent. The ringgit has gained more than 6 per cent year-to-date, making it the best performing Asian currency.

RATE PAUSE IN JULY, BUT TO CONTINUE LATER?

Growing uncertainty about the global economic recovery may lead to more moderate economic growth, prompting the central bank to pause its tightening campaign at the current 2.5 per cent before hiking rates once more in the fourth quarter.

Bond and forex traders say the sharply divided outlook for Thursday’s decision is due to the markets’ inability to gauge what the central bank considers to be an acceptable level.

The Official Policy Rate (OPR) has a relatively short history, making it difficult to determine what is considered a normal level. It was only introduced in 2004, with an initial setting of 2.7 per cent.

Three-month KLIBOR was quoted at 2.73 per cent today. In the forward starting swaps space, the 3-month rates swap on a contract starting after 3 months was quoted at 2.80 per cent.

This implies the market is pricing in just 7 bps of rate tightening by October. The KLIBOR in recent weeks has increased 6 bps since the May rate hike, compared to a 37 bps gain before the May rate hike, implying that there is less anticipation for a hike on Thursday.

Probability: Less likely

Market impact: A pause would not be a big cause for concern as foreign investors are still buying ringgit and government bonds as Asian currencies track yuan gains after China abandoned its two-year currency peg to the dollar.

Genting: Load of Excuses for Another Daylight Robbery?

Genting Malaysia Bhd yesterday replied to Bursa Malaysia queries on the proposed acquisition of the casino businesses in Britain from sister company Genting Singapore plc for £340mil (RM1.66bil).

Genting Malaysia said that as at June 30, the total outstanding advances owed by the acquiree group (Britain casino business) to Genting Singapore plc was about £336,457.

Such outstanding advances owed by the acquiree group would be settled and/or waived prior to the completion of the proposed acquisition, it said.

It also said JPMorgan Securities (Malaysia) Sdn Bhd had based its valuation of the equity value of the acquiree group on a variety of intrinsic and public-market based methodologies, which included conducting a discounted cashflow valuation and an analysis on trading comparables.

The valuation of equity value was between £310mil and £370mil.

In arriving at the said valuation, JP Morgan had also, among others, reviewed certain publicly available business and financial information concerning the acquiree group and the industries in which they operate.

Bursa has asked Genting Malaysia to furnish it with the total amount of outstanding advances owed by the acquiree companies to Genting Singapore as at the latest date.

It also wanted to be informed of the salient features of the valuation of the equity value of the acquiree group as conducted by JPMorgan Securities (Malaysia) .

The plan, a third-party transaction, has drawn its fair share of criticism from analysts who said the investment was pricey for a risky market, provided little growth catalyst and may require more capital injection in the future

So are you on the jury for this value-bashing exercise of GenM  by cannibalistic Genting Berhad?

Wilmar Sugar plans in Papaua New Guinea

Wilmar International Ltd said it plans to develop sugar plantation and sugar mill in Papua with an estimated investment cost of around US$2 billion, a company official said at the weekend.

M.P. Tumanggor, commissioner of PT Wilmar Nabati, a subdiaary of Wilmar International, was quoted by kontan.co.id on Saturday, said the company will conduct a feasibility study for investing in sugar plantation in Papua within the next six months.

"We don’t know for certain yet when the plan could be realized as the infrastructure in Papua is not sufficient," he said, noting the high transportation and distribution costs would make sugar price to be expensive and less competitive.

Tumanggor said Wilmar's management had been in talks with M.S. Hidayat, Industry Minister, as the company is proposing to get incentives for building roads and ports.

The cost to develop infrastructure alone in Papua could reach Rp2 trillion, he said.

Wilmar International operates in four business segments: merchandising and processing, consumer products, plantation and palm oil mills, and others.

The other segment includes the business of manufacturing and distribution of fertiliser products and ship-catering services.

The company sells 40 percent of its crude palm oil to its customers in Europe, China and India.