Tuesday, March 06, 2007

Genting Closer to getting Casino Licence in Singapore

PETALING JAYA: Concerns over the Genting group not being able to secure the casino licence in Singapore may ease after Star Cruises Ltd withdrew from the Sentosa integrated resort (IR) project, effectively excluding Macau gaming baron Stanley Ho from the venture.

Genting International Plc (GIL), which will have full control of the project, will also exit from its proposed partnership with Ho and Star Cruises to build a casino hotel in Macau to tap the China market.

The latest development raised hopes that the Genting group will pass the suitability check by Singapore's Home Affairs Ministry for a casino licence for the IR.

The ministry said last week the suitability check would be on GIL and parties associated with it. It also said the check would be an on-going process even after a licence had been issued.

The casino licence will only be issued when the Sentosa IR is 50% completed.

In a statement, GIL said the restructuring of the project's shareholding would “assist the company in the management process of (its) casino application in due course.”

However, the news did not stem the plunge in parent company Genting Bhd's share price.

Genting's share price slid to RM32, down RM2.50 or 7.25% yesterday.

Its unit Resorts World Bhd's share price was also bogged down by heavy selling, shedding RM1, or 7%, to RM13.30.

Year-to-date, Genting and Resorts World have lost RM9.25 and RM4.50 from their peak of RM41.25 and RM17.80 respectively.

Over the weekend, Genting's associate company Star Cruises announced it intended to withdraw its investment from Resorts World at Sentosa Pte Ltd (RWS) by offering its 25% equity interest in RWS to GIL at a price to be determined later.

Also, GIL had agreed to sell to Star Cruises its 25% stake in New Orisol Investments Ltd, a vehicle for it to enter the Macau gaming market.

Analysts said Genting would benefit from the restructuring, in terms of profit contribution from Sentosa, because it held a bigger direct stake in GIL than in Star Cruises.

Resorts World, which owns a 36% stake in Star Cruises and 6.5% in GIL, will derive lower profit contribution from Sentosa as was expected in the original structure.

Instead, it can look forward to reaping a higher profit from Star Cruises' enlarged portion of the Macau gaming investment.

MIMB Investment Bank Bhd analyst Teh Kian Yong agreed that the announcements were positive news, but said it was still difficult to say if the group would pass the “suitability check” by the Singapore authorities.

Teh noted the outcome was very much dependent on whether the check would involve the entire Genting group.

“Don’t forget Stanley Ho will still own a stake in Star Cruises, which is also part of Genting group,” he added. Analysts generally believe that Genting would do everything possible to secure the casino licence even at the expense of terminating its venture in Macau if the situation warranted such a move.

Source : STAR
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