Saturday May 26, 2012

Genting solid despite MTN issue

PETALING JAYA: Genting Bhd's latest proposal to issue medium-term notes (MTN) may result in a substantial increase in the group's net debt but analysts believe the position will remain manageable for the diversified conglomerate.

“The company is in a strong position, given the strength of its businesses,” an analyst said.
“We believe the bulk of proceeds from the issuance of the new debts will be diverted to new investments, which will only further strengthen the group. So, it could be a good thing.”
Genting Bhd on Thursday announced that its wholly-owned subsidiary, Genting Capital Bhd, had received Securities Commission's approval for the establishment of an MTN programme worth RM2bil.

An aerial view of Genting Highlands Resort. Genting Bhd has received Securities Commission’s approval for a RM2bil medium-term notes programme.

Genting said it would guarantee the notes to be issued by its unit pursuant to the proposed MTN programme, which has been assigned a long-term rating of AAA(s) by RAM Rating Services Bhd.
It said proceeds from the MTN would be used for operational expenses (opex) and to finance its subsidiaries' opex, capital expenditure (capex) and investment plans.

RHB Research, in its report, said Genting's net debt would likely rise to an estimated RM3.4bil at company level, assuming the full RM2bil of MTNs were issued and utilised. At group level, though, Genting would see its net debt rising to RM1.8bil compared with a net cash position of RM194mil as at end-2011.

This implied a net gearing of 10.4% at group level, which analysts at RHB Research said remained manageable.

UOB Kay Hian Research believed the issuance of the new MTNs was meant for Genting's investment ventures. It highlighted Genting's announcement of a proposal to construct and operate a 660-megawatt coal-fired power plant in Indonesia, which the research house assumed would incur a total investment of about RM2.6bil.

“Nevertheless, we are not ruling out other investment opportunities in which Genting could be involved, such as Genting Singapore plc's venture into new markets,” UOB Kay Hian Research said in its report.

AmResearch, in its report, said that among Genting's subsidiaries, gaming arms Genting Singapore and Genting Malaysia Bhd were the most aggressive in overseas expansion.
AmResearch noted that Genting Singapore was currently working on two projects and had recently raised S$2.3bil (RM5.68bil) in perpetual bonds.

“So far, Genting Malaysia has not carried out any major fund-raising exercise. The group relied on external borrowings to finance the development of Resorts World New York (RWNY).
“Going forward, however, Genting Malaysia would have to find ways to finance the US$4bil extension of RWNY if it successfully concludes negotiations with the Empire State Development Corp of New York on Nov 30,” it added.

Genting Malaysia had net cash of RM343mil as at financial year ended Dec 31, 2011.
AmResearch reckoned that Genting Plantations Bhd, on the other hand, would be able to finance its expansion in Indonesia without any cash calls.

http://biz.thestar.com.my/news/story.asp?file=/2012/5/26/business/11361347&sec=business

Genting solid despite MTN issue PETALING JAYA: Genting Bhd's latest proposal to issue medium-term notes ( MTN) may result in a substantial increase in the group's net debt but analysts ... thestar.com.my/news/story.asp?file=/2012/5/26/...sec...

RAM Ratings assigns and reaffirms top ratings for Genting Group ... Read 'RAM Ratings assigns and reaffirms top ratings for Genting Group' on Yahoo! News Malaysia. KUALA LUMPUR (May 24): RAM Ratings has reaffirmed the ... my.news.yahoo.com/ram-ratings-assigns-reaffirms-top-ratings...