Genting shares fall most since 1998 after rights issue plan
The Malaysian leisure group plans to raise about RM1.25 billion to repay borrowings and provide working capital.
Genting Bhd shares dropped as much as 17 per cent to RM1.56 on October 12, recording their steepest decline since 1998 after the group announced a planned renounceable rights issue of about RM1.25 billion.
The leisure company, controlled by Malaysian billionaire Lim Kok Thay, said in an October 9 stock exchange filing that the issue would be priced at a discount of between 25 per cent and 30 per cent. It intends to use the funds for debt repayment and working capital.
Genting reported a second-quarter net loss in August. Its total borrowings had increased to RM45.3 billion by the end of June.
Maybank Investment Bank analyst Samuel Yin cut his recommendation from buy to sell. His analysis indicated limited interest savings and debt reduction, alongside substantial dilution of earnings and book value per share. He also said further equity fundraising or lower dividends remained possible, and that the exercise could indicate difficulty refinancing borrowings over longer terms.
Shares in subsidiary Genting Malaysia Bhd declined by as much as 8.1 per cent, their largest fall in more than a year.
Fitch Ratings lowered Genting’s rating to BBB- in September. It expected debt reduction to proceed more slowly because of substantial spending required to expand key properties, including in Singapore and New York.
