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Genting Should Be Pretty Pissed
But Corporate Credentials Soar

Genting International’s bid for Stanley Leisure is a good move, even though its NTA would take a whack. There are not that many gaming properties available with the size as Stanley Leisure or London Clubs. Genting has to make the move even though that was probably hastened by Harrah’s bid for London Clubs. What would piss the management off a bit is that Citigroup is advising its Stanley Leisure bid, but Citigroup’s research has rated Genting as Neutral/Reduce in ratings terminology. With the firm implementation of the Chinese Wall, the research side would not have any inkling on the investment banking’s strategy and vice-versa. Only Genting’s management has access to both division. While Genting may find the situation a bit awkward, there is nothing much it can do. Neither can the investment banking side do much persuasion.

The double whammy came when Resorts World just raised RM1.1 billion in a convertible note issue, lead managed by CIMB. Wallah… in less than a week, CIMB came up with a 100 million call warrants on Genting. A call warrant necessarily means the issuing house is betting on no-conversion or that the Genting’s stock price will be flat or down in the near future. If I was running the Genting group, I’d be a bit pissed off, wouldn’t you. Its gratifying to note that investment banking houses, local and foreign, did the right thing. If it was 5 or 10 years ago, you can bet that the research report would align itself with the investment banking work flow and that the call warrant would not appear … at least not so soon.

To the eyes of international institutional investors, Genting’s corporate governance record would improve a few notches. It show’s management’s impartiality and professionalism in its corporate strategy. Nonetheless, over drinks I am sure the Genting management would be bitching in private. Give them business, also can get backhanded slap in the face. Still, Genting comes out smelling like roses.

Comments

doraiddd said…
hi dali,
perhaps if the tight old beancounters so adept at kiasuness there did not put such a tight squeeze on the fees, yields and spreads, given the current market conditions, the investment bankers would've made their chinese walls a bit more transparent ala david copperfield??

and does anyone seriously think the kiasu kings down south would award their only pleasure island to a MALAYSIAN company thats already taken so much money from their countrymen for the last few decades? somemore without even a local partner? (unless they commit, say, 6 bil US? hahahah just like TM (aka Totally Mad Bhd?) buying M1.. another hahahah)

I would rate genting a SELL (on strength-lar..) the research houses are still being too kind.

different matter - i hope david's got nothing to do with the landmarks buy??..
sopskysalat said…
hi there,

can you elaborate further on the following?
%%%
The double whammy came when Resorts World just raised RM1.1 billion in a convertible note issue, lead managed by CIMB. Wallah… in less than a week, CIMB came up with a 100 million call warrants on Genting. A call warrant necessarily means the issuing house is betting on no-conversion or that the Genting’s stock price will be flat or down in the near future.
%%%

If they issued call warrant, shouldn't the issued manager deem bullish on the counter? I do not get you on why it is deemed bearish and it is linked to no conversion of the note?

Hope you can teach me more on coporate finance. Haa.. Thanks!

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