Published May 28, 2009

Genting again rocks the boat at Sentosa

Move to sell 9% stake means more probity checks prior to licence award

By ARTHUR SIM

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(SINGAPORE) With only months to go before the casino at Resorts World at Sentosa opens, Genting Singapore seems prepared to gamble with its casino licence again by making the regulatory probity process more complicated.

Pansy Ho: US gaming officials have recommended that MGM Mirage cut ties with its partner Ms Ho. Genting Group is said to have bought secured notes from MGM

In a statement released yesterday, Genting Singapore said that existing shareholders of the company had sold about 850 million shares via a private placing agreement representing a significant stake of about 9 per cent worth over $600 million.

The sale sent the share price plummeting almost 18 per cent to 71 cents, down 15.5 cents from the previous day. Reuters also quoted a term sheet it had seen revealing that the shares were sold for between 72-76 cents per share.

Apart from introducing new shareholders to the fold, there has also been speculation that the Lim family, headed by Lim Kok Thay, may be looking to raise capital for a possible acquisition of MGM Grand Macau. But any new significant shareholders in the company here will be scrutinised by regulators.

In response to an SGX query, Genting Singapore said: 'The respective substantial shareholders will in due course be releasing the relevant Notice of Substantial Shareholder's Change in Interests/Cessa- tion of Interests (as the case may be).'

The sale of shares was done through Golden Hope Ltd and Lakewood Sdn Bhd, vehicles that are understood to be controlled by the Lim family which owns Malaysian gaming firm Genting Bhd, the parent of Genting Singapore.

All significant shareholders of Genting Singapore will be expected to undergo strict probity checks before the gaming licence is awarded to the casino operator here by the Casino Regulatory Authority (CRA). It is understood that the gaming licence has not been awarded yet.

Speculation on the Macau deal was fuelled when it was revealed on Monday that Genting Group had acquired US$100 million in secured notes from MGM Mirage.

The talk of a divestment of MGM Grand Macau was itself sparked when the New Jersey Division of Gaming Enforcement recommended last week that MGM Mirage sever ties with Pansy Ho, its partner for MGM Grand Macau, adding that the daughter of Chinese gaming magnate Stanley Ho is an unsuitable partner.

Bloomberg had quoted Ang Kok Heng, chief investment officer at Phillip Capital Management in Kuala Lumpur, as saying that the Lim family may be raising funds to finance a possible investment in MGM Mirage's Macau casino. But he also added: 'It's not easy for Genting or Resorts World Bhd to take over MGM Mirage's venture in Macau because of their investment in Singapore. There's a likelihood the Singapore government may not agree, so the family has to come in on their own.'

This is not the first time Genting Singapore has raised eyebrows in Singapore by associating itself - perceived or otherwise - with Stanley Ho.

In 2007, after winning the tender to build one of two casino resorts in Singapore, Genting Singapore said it was looking to sell a stake in Star Cruises - which was then its partner in the Sentosa resort - to Stanley Ho. Genting Singapore later had to backtrack on this and subsequently acquired Star Cruises' entire stake in the resort in an apparent bid to pacify the Singapore government.