Genting Malaysia Bhd, the casino owner that parlayed a single hilltop site near Kuala Lumpur into gambling resorts in Singapore, the Philippines and the UK, is now looking for investments in the US.
“Genting Malaysia is aggressively searching for opportunities to invest in the US casino gaming market,” Justin Leong, head of strategic investments and corporate affairs at group parent Genting Bhd, said in an interview in New York. “Our strategy is building a US presence.”
Armed with US$1.7 billion in cash and debt free, Genting Malaysia is seeking acquisitions, new markets and potentially a strategic partnership in the US, Leong said. The Kuala Lumpur- based company, which said this month it may bid to develop a slots casino at Aqueduct Racetrack in New York City, first invested in the US sector last year, buying MGM Mirage bonds.
“It’s unlikely to be a single asset,” Leong said. “If we were to acquire something, it’s more likely to be a portfolio of assets or a substantial stake in a company.”
Genting Malaysia is also looking at developments and new gambling jurisdictions opening in the US, Leong said.
The company bought MGM Mirage’s secured bonds in May 2009 when the Las Vegas Strip’s biggest casino owner raised cash to avoid a potential bankruptcy. Genting Malaysia has invested in every capital issue by Las Vegas-based MGM since, Leong said.
“Genting Malaysia’s first foray into the US casino market was investing in MGM, and that strategic relationship continues,” said Leong, 32. The bid for Aqueduct “is another step.”
Kerkorian’s Stake
The investments include US$100 million of bonds secured by MGM’s Bellagio and Mirage properties in Las Vegas, 9 per cent notes tied to MGM Grand and MGM Mirage’s recently issued convertible senior notes.
Kirk Kerkorian, who founded MGM Mirage and is its biggest shareholder, said in October that his Tracinda Corp. is exploring “strategic alternatives” for its 37 per cent stake. The investor, 93, said in regulatory filings that MGM Mirage is undervalued and he is open to proposals.
Leong wouldn’t elaborate on Genting’s interest or say whether there have been talks with Kerkorian, whose stake in MGM Mirage is valued at US$1.9 billion. The shares rose 14 cents to US$11.60 on June 11 in New York Stock Exchange composite trading and have gained 27 per cent this year.
Winnie Lerner, an outside spokeswoman for Tracinda, and Alan Feldman, a spokesman for MGM Mirage, declined to comment.
MGM Mirage and partner Pansy Ho hold one of the six casino licenses in Macau, the southern Chinese city that is the world’s largest gambling hub. Ho is the daughter of Macau casino billionaire Stanley Ho.
‘Faster, Sooner’
Revenue from the Malaysian casino, a gambling monopoly held for almost four decades, helped build the Genting Bhd empire that includes hotels, Star Cruises and Norwegian Cruise Lines, power generators and palm oil plantations.
In February, a Genting affiliate opened Singapore’s first casino, a US$4.7 billion resort with a Universal Studios theme park, adding to the group’s Resorts World casinos in Malaysia’s highlands and the Philippines capital of Manila.
Genting also is the biggest casino owner in the UK, operating under the Circus, Maxims and Mint brands.
There is competition for deals in Las Vegas as the city recovers from its worst economic slump on record. Hedge fund billionaire John Paulson is acquiring a 9.9 per cent stake in Harrah’s Entertainment Inc. In May, his New York-based Paulson & Co said it owned 9.1 per cent of MGM Mirage and 4.6 per cent of Boyd Gaming Corp.
Genting Malaysia has held investment talks with large US casino companies since December 2008, Leong said, declining to specify them.
“I wish I had worked faster and done something sooner,” Leong said.
Leong, a nephew of Genting chairman and chief executive officer Lim Kok Thay and grandson of founder Lim Goh Tong, joined the family company in September 2004 after about four years at Goldman Sachs Group Inc.
Aqueduct Auction
Genting is one of six potential bidders vying to renovate Aqueduct Racetrack and operate a slot machine-style “racino” with 4,500 video-lottery terminals in Queens. The latest round of proposals, which require a minimum US$300 million up front, are due June 29.
The family’s closely held Kien Huat Realty previously invested in three U.S. casino ventures, and last month partnered with the Mashpee Wampanoag Tribe to finance a proposed casino resort in Massachusetts.
In the early 1990s, Kien Huat financed the Foxwoods Resort & Casino in Connecticut, whose tribal owners defaulted on about US$2.5 billion of debt last year, and the Seneca Niagara Casino in New York.
In August, Kien Huat paid US$55 million for 50 per cent of Empire Resorts Inc, owner of the Monticello Casino & Raceway in Monticello, New York, helping Empire to restructure some debt. -- Bloomberg
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