Genting to use RM1.45b MTN proceeds for future investments

Written by Melody Song

Friday, 06 November 2009 14:19

KUALA LUMPUR: GENTING BHD [] plans to use the RM1.45 billion proceeds raised from the issuance of 10-year medium term notes (MTNs) for further investments, debt refinancing, working capital requirements and other general corporate purposes, said chairman and chief executive Tan Sri Lim Kok Thay.

Lim added that the Genting group was also mulling the possibility of disposing of its non-core assets, which included power plants and oil and gas assets.

“We are speaking to interested parties, but we are not close to completing a transaction as such,” he said, referring to speculations that the group was planning to dispose of its non-core businesses to focus on its casino operations in Malaysia and Singapore, and to expand its gaming business in other markets such as Macau.

“However, we are in no hurry to get rid of them,” said Lim, who was speaking to reporters after the signing ceremony between Genting and CIMB Investment Bank Bhd and HSBC Bank Bhd, which are the joint lead arrangers and joint book runners for the MTN programme.

Lim added that there was a possibility of Genting retaining its non-core assets, but then this will require more attention on making the group’s capital more efficient. “If we keep them, we will decide if they have enough potential to accelerate growth (at the group level),” he said.

In Genting’s first half (1H09) (FY ends Dec 31) results, the company’s oil and gas division reported a 73% decline in profit before tax (PBT) to RM9.4 million from RM35.4 million a year earlier. Meanwhile, PBT in its power division also fell 15% to RM176.7 million in 1H09 compared with RM208.4 million in 1H08.
Lim. Photo by Suhaimi Yusuf

With regard to the MTNs, Lim said the funds raised would strengthen the group’s financial position as well as giving it greater flexibility in terms of cash flow management.

The exercise is done via Genting’s wholly owned subsidiary GB Services Bhd. The proposed MTN issue was priced at 5.3% per annum and assigned AAA rating by RAM Ratings Services Bhd.

Lim added the group originally targeted raising RM900 million as the first tranche issue under the programme, but due to “overwhelming response”, it was upsized 1.6 times to RM1.45 billion.

“Given the challenging global financial environment and high volume of fund raisings of late, this is a remarkable achievement and testimony to the strength of Malaysia’s capital market,” he said, adding that the deal was the largest 10-year corporate bond issuance from the gaming sector in Asia-Pacific since the global financial crisis in 2008.

NEW MILESTONE... From left: Genting Group deputy chairman Tun Mohammed Hanif Omar, chairman and chief executive Tan Sri Lim Kok Thay, CIMB Group chief executive Datuk Seri Nazir Razak and HSBC Bank Malaysia Bhd deputy chairman and CEO Irene Dorner at yesterday’s signing ceremony to mark Genting’s pricing of RM1.45 billion 10-year medium term notes (MTN) pursuant to its RM1.6 billion MTN programme yesterday. CIMB Investment Bank and HSBC Bank are the joint lead arrangers and book runners for the MTN programme. Photo by Mohd Izwan Mohd Nazam

It was also the largest 10-year AAA-rated corporate bond in the ringgit debt market issued in the last five years.

Datuk Seri Nazir Razak, CIMB’s group chief executive, described the MTN issue as “a new milestone for the group in the Malaysian debt capital markets, as it is the first ringgit debt issue by the flagship holding company”.

He said the highest AAA rating accorded by RAM also reflected the strong credit standing of the issuer. The success of this MTN issue was an endorsement of Genting’s robust business profile and its management’s reputation by the investor community.

HSBC Bank Malaysia Bhd deputy chairman and CEO Irene Dorner said Genting’s own impressive credentials and reputation played a significant role in positioning the MTN issue.

She said features of the MTN issue such as the rarity factor of the papers, the strong management and robust financials, the highest credit rating and the positive growth potential combined to make this an attractive offering to a range of investors.

The book-building process for the MTN programme began on Oct 27 and closed earlier than expected the following day. The programme attracted strong sizeable bids from a range of investors, comprising asset management companies, financial institutions, insurance companies, mutual funds and private banks.

On another note, Lim said Genting’s subsidiary Genting Singapore plc is on target to open its S$6.6 billion (RM16.2 billion) gambling resort in Singapore in early January 2010.

This article appeared in The Edge Financial Daily, November 6, 2009.

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Last Updated on Friday, 06 November 2009 14:23

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