Genting Malaysia Bhd’s unit Genting New York LLC, which has won the bid to operate a video lottery terminal facility in New York, plans to invest US$1.3bil (RM4.19bil) in the project. So is this good for minority shareholders?
Currently, Genting Malaysia has also been on a roadshow ahead of its EGM to drum up support for its plans to acquire Genting Singapore plc’s whole UK casino operations for £340mil (RM1.7bil).
The EGM is on Aug 24, and Genting Malaysia wants to ensure it has enough support to ensure the deal goes through. That will be no problem with the big boys at Gentings. Their network will do the 'deed'. So the EGM for the takeover of GentingUK is a fait accompli.
This means that whatever is left in the reserve coffers will be pilfered and frittered down to do up the racino project. So GenM minority shareholders-you are the real suckers and whipping boys. Another feather for the Genting big boss!
Now back to our story. Apparently, Genting New York had signed the agreement last week but only made the announcement in New York yesterday. That is why they were feeding like crazy over here at the Bursar for GenM shares,like hogs so it seems.
I think just like it the Sentosa Resort world case, expect overruns. Already some USD380million has gone kaput to save the city. According to a copy of the proposal submitted by Genting to the New York lottery authority, Genting New York will pay a licensing fee of US$380mil (RM1.22bil), above the minimum US$300mil (RM966mil) required by the city of Aqueduct, NY.
As the planning goes,Genting New York intends to spend a further US$350mil to develop the facility, which upon full completion will span 413,000 sq ft and contain more than 4,500 video lottery terminals or electronic slot machines.
Dubbed Resorts World New York, the proposed three-storey facility will also contain several restaurants, water features, an outdoor terrace connected to the Aqueduct racetrack which will be able to accommodate up to 10,000 people and a 2,200-bay car park.
Genting New York aims to complete the entire development within 12 months from the date it obtains formal approval from the state to proceed.
As part of a wider development plan, Genting New York is also proposing to build three hotels of differing standards, shopping, recreation, spa and other resort facilities at a total cost of US$650mil (RM2.09bil). That will take the proposed outlay for the entire project to over US$1.3bil.
Presently, Genting Bhd owns 47.33% of Genting Malaysia. On Tuesday, Genting Malaysia rose to its year-high of RM3.11 and closed the day at RM2.99, 17 sen up. Genting Singapore closed S$1.52 (RM3.58).
Genting Bhd, parent to both Genting Malaysia and Genting Singapore Plc, rose 21 sen to RM8.93, a three-year high.
The shares of all three stocks have rallied since Genting Singapore reported a second quarter profit on Aug 12 after opening a casino resort in the city-state.
Meanwhile, some shareholders have not been happy with Genting Malaysia’s plan to acquire the UK casino operations as it is viewed as a related party transaction. Furthermore, they feel the acquisition price is high compared to its current value.
“Genting Malaysia is saying that they are buying the UK operations cheaper. After all, in 2006, Genting Singapore acquired Genting UK for £699.4mil. Furthermore, they see growth in Genting UK,” said one analyst who met up with Genting Malaysia’s management.
For £340mil, Genting Malaysia will get 44 casino licences for the UK operations, as well as properties with a net book value of £289mil (RM1.45bil), not inclusive revaluation gains.
The analyst, however, cautioned that the operating environment in the UK was still tough. In recent years, the casino market has been affected by legislation, including a smoking ban in enclosed public areas. Gaming operators are also now imposed with higher taxes. Hence, the underlying value of the casinos could be lower than the £340mil paid, according to the analyst.
As you can see, even the analysts are cautious of this UK deal. Aren't you?
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