GENTING Bhd's Singapore unit said yesterday it plans to raise as much as S$1.63 billion (S$1 = RM2.45) through a rights offer to fund future acquisitions and investments, as well as for working capital.
The move has fanned speculation that the Genting group may be looking to make investments in markets like Macau and the US, and over the medium-to-longer term, Taiwan and Japan.
The cash call is expected to weigh on Genting, which owns a 54 per cent stake in GSL, as it will have to fork out a sizeable sum of about S$840 million to fully take up its portion of the offer. It intends to take up its full entitlement.
Genting shares tumbled 4.2 per cent yesterday to RM6.87.
Genting had a net cash of about RM310 milion at company level as at end-2008, but as a group, it has substantially more, about RM2.4 billion.
Keith Wee, an analyst at OSK Research, believes that Genting has three options to come up with the cash; it could rely on an increase in dividends from its cash cow unit Genting Malaysia Bhd, undertake bank borrowings, or raise cash from convertible bonds on its stake in Genting Malaysia.
"It could do a bit of each," he told Business Times when contacted.
He plans to upgrade shares of Genting, Asia's largest listed casino operator, to a "trading buy" from "neutral" presently, saying it presents a cheaper option for exposure to the Singapore business. He may raise its fair value to RM7.90 from RM7.15 now.
The rights issue won't have an impact on Genting's earnings, an analyst from UOB Kay Hian said.
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