* Genting Singapore says rights to strengthen financials
* Says Resorts World on track in terms of costs, timing
* Genting Bhd shares down more than 4 pct at one point
* Analysts concerned about cost overruns at Singapore
* Genting Bhd may tap Genting Malaysia's cash hoard
(Recasts with comments, group details)
By Kevin Lim and Saeed Azhar
SINGAPORE, Sept 9 Casino operator Genting
Singapore (GENS.SI) is raising $1.2 billion in a rights issue
for possible acquisitions, leading a bout of fund-raising by
casino companies in Asia taking advantage of rising stock
The Singapore firm also said on Wednesday its Resorts World
at Sentosa casino development is on track, both in terms of
project costs and timing, for a "soft opening" in early 2010,
debunking fears of more cost overruns at its massive project in
Las Vegas Sands (LVS.N), the world's most valuable casino
firm, plans to spin off its Macau operations in a Hong Kong
initial public offering to raise as much as $3 billion, while
Wynn Resorts (WYNN.O) is expected to list its Macau business in
the fourth quarter. [ID:nHKG366971]
"The rights issue will strengthen the company's financials
and put us in a strong position to tap strategic
opportunities," Genting Singapore Managing Director Justin Tan
said in a statement.
But speculation remained strong that the issue was to
address cost overruns at the Resorts World at Sentosa casino
that it is building in the city-state, as AmResearch said in a
research note issued before the company formally announced the
Analysts also said the Singapore unit's fund-raising may
result in parent company Genting Bhd GENT.MY tapping 4
billion ringgit ($1.14 billion) in cash held by Genting
Malaysia (GENM.KL), which operates the group's lucrative casino
business in the Muslim country.
"The rights issue is not necessarily a negative thing.
Since the project started, there have been cost overruns,"
Abdul Jalil Rasheed, equities chief at Aberdeen Asset
Management's Malaysia unit, told Reuters in Kuala Lumpur.
Genting Bhd has only about 350 million ringgit in cash and
will need to raise debt through banks or get an inter-company
loan from Genting Malaysia, he added.
Genting Singapore's cash call "could be a catalyst for
Genting Bhd to accelerate the sale of its noncore assets or
push Genting Malaysia to pay out its 4 billion ringgit cash
hoard," JPMorgan said in a note to clients.
Genting shares in Singapore were suspended earlier on
Wednesday, while shares in its parent, the Kuala Lumpur-listed
Genting Bhd, ended 4.2 percent lower compared with a 0.47
percent fall in the main index .KLSE, as investors reacted to
the cash call.
Shares of Genting Malaysia closed 1.4 percent lower.
Genting Singapore will offer shareholders one rights share
for every five held at S$0.80 per rights share, or at a 33
percent discount to the stock's last traded price. The issue
will raise S$1.63 billion ($1.15 billion).
Genting Bhd has agreed to subscribe for its 54 percent
entitlement of the rights issue.
LOSSES SINCE LISTING
Genting Singapore is building one of the city-state's two
integrated casino resorts, and is also the largest casino
operator in the United Kingdom.
Genting's Resorts World at Sentosa casino has been plagued
by cost overruns due to the escalating price of steel and other
building materials, a problem also faced by Las Vegas Sands
which is building the city-state's other casino.
The latest cost estimate is about S$6.6 billion ($4.6
billion), more than the S$5.2 billion price tag cited shortly
after the firm won the Singapore bid in December 2006.
Genting Singapore shares have more than doubled this year,
and closed at S$1.19 on Tuesday.
The firm has been reporting losses since it listed in
Singapore in December 2005, hit by the cost of building the
Singapore casino and writedowns related to its purchase of
casinos in Britain.
It posted a second-quarter net loss of S$50.7 million.
DBS (DBSM.SI) and CIMB BUCM.KL are the joint lead
managers for Genting Singapore's rights issue. They are also
lead underwriters for the issue, alongside UBS UBSN.VX,
JPMorgan (JPM.N), Deutsche Bank (DBKGn.DE), HSBC (HSBA.L), CLSA
and Royal Bank of Scotland (RBS.L).
($1=1.423 Singapore Dollar)
(Additional reporting by Julie Goh in Kuala Lumpur; Editing by
Dhara Ranasinghe, Valerie Lee and Muralikumar Anantharaman)