Published May 26, 2009

Genting shares jump on MGM Macau stake report

Speculation rife MGM may sell the stake to Genting

By S JAYASANKARAN
IN KUALA LUMPUR

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A REPORT that Malaysia's Genting group could be eyeing MGM Mirage's 50 per cent stake in the MGM Grand Macau casino sent shares of Genting and its subsidiary Resorts World up 6 and 8 per cent yesterday. Genting closed at RM5.55 while Resorts was last traded at RM2.79.

But according to an official familiar with the Genting group, the matter could be complicated.

Malaysia's OSK Investment Research said yesterday speculation is rife that MGM may sell its Macau stake to Genting.

'Although it is premature to speculate on such an outcome considering the intricacies of the licensing agreement, we believe that given Genting's strong appetite for large-scale casino investments in Macau, it could pave the way for the group's long-awaited entry into Macau's gaming market in a meaningful way,' OSK said.

Last week, Genting and Resorts told Bursa Malaysia they had each subscribed to US$50 million of MGM commercial paper with yields of between 10.4 and 11.2 per cent.

Around the same time, news reports said MGM had been warned by the New Jersey gaming authorities that its partner in the Macau venture, Pansy Ho, is not a 'suitable' partner.

The US authorities advised MGM to 'disengage' from Ms Ho, who is the daughter of Macau gaming kingpin Stanley Ho. This was in response to MGM's application to renew a licence for its hotel-casino in Atlantic City in New Jersey.

The two events conspired to fuel speculation that MGM might have to sell its Macau investment to a friendly party because of regulatory pressure in the United States.

In addition, Resorts has more than US$1.3 billion cash and has indicated interest in Macau, where it is not represented.

But the matter is not that simple.

'We have no idea how the Singapore authorities would view Pansy Ho,' the official familiar with Genting told BT. 'So it could be a risk.'

He did not elaborate. And Genting officials could not be contacted for comment.

The Genting group is developing a billion-dollar hotel-and-casino complex in Singapore with Universal Studios. The project is expected to be completed next year.