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Tuesday, February 12, 2008

Genting Intl borrows S$4.2b to build casino

BIG GAMBLE: Genting International funding will help the firm compete with Las Vegas Sands Corp as both race to open Singapore's first casino resort in about two years.

SINGAPORE: Genting International plc, a unit of Asia's biggest gaming operator by market value, borrowed as much as S$4.2 billion (RM9.6 billion) to build a casino-resort in Singapore, more than double its outstanding debt.

The unit of Kuala Lumpur-based Genting Bhd hired DBS Group Holdings Ltd, Oversea-Chinese Banking Corp, Sumitomo Mitsui Banking Corp, HSBC Holdings plc and Royal Bank of Scotland Group plc to arrange the borrowing, according to a statement sent to the Singapore exchange yesterday.

"It is a big gamble," said Lim Kok Boon, Singapore-based chief investment officer at Fortis Private Banking, which manages US$9.5 billion (RM billion) in assets. "It is hard to tell how it is going to pan out for them, but clearly the casino project cannot fail as Genting International and the Singapore banks will be badly implicated."

The company's funding will help the company compete with Las Vegas Sands Corp as both race to open Singapore's first casino resort in about two years. The two gaming developments will have Singapore's casino market for at least 10 years before the government opens up the industry to further competition.

Genting International's funding will add to the S$2.17 billion raised in an August rights offer in August and S$450 million of convertible bonds sold in April to fund its project on Singapore's Sentosa island. The development will include Southeast Asia's first Universal Studios theme park.

The company's borrowing consists of a S$4 billion loan and S$192.5 million in a bank guarantee facility, the statement said.

The company has US$1.4 billion of outstanding debt, according to data compiled by Bloomberg.

Genting International declined to comment on the terms of the loan except that it's "very happy" with them.

Las Vegas Sands, the world's largest casino operator by value, hired eight banks last year to arrange a loan of about S$5 billion for its Singapore gaming resort in the city's downtown.

The two casino loans top the S$1.56 billion offered to CapitaLand Ltd, Singapore's biggest developer, and Sun Hung Kai Properties Ltd, Hong Kong's largest, for their Orchard Turn project. The 2006 loan for the shopping mall and luxury home development in downtown Singapore was the largest for a Singapore property project since at least 1999, according to Bloomberg data.

By Bloomberg

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