Genting in joint bid for Singapore projects

Linus Chua and Kate Mayberry

Wednesday, April 13, 2005 | 9:21 a.m.

Genting Bhd., Asia's biggest publicly traded casino operator, said each of the two Singapore projects it's bidding for that may include the city's first casinos will cost S$3 billion ($1.8 billion) to S$4 billion.

The Kuala Lumpur-based company, which has teamed up with Universal Studios' theme-park unit for one of its two bids, may eventually sell shares in its Singapore unit, Chairman Lim Kok Thay, 54, said in an interview.

Singapore will next week say whether it will scrap a long- standing ban on casinos, and has received gaming development proposals from Harrah's Entertainment Inc., Las Vegas Sands Corp., MGM Mirage and others. Genting and its Star Cruises Ltd. unit are bidding to develop a downtown site, and along with Universal have proposed a development on the resort island of Sentosa.

"This joint bid does increase their chances, but the competition is there and there's no guarantee of success," said Mike Lai, who helps oversee the equivalent of $658 million at HLG Asset Management Sdn. in Kuala Lumpur. Lai owns shares in Genting and the company's Resorts World Bhd. unit, which operates a hilltop casino and resort complex in Malaysia.

Genting's Lim declined to say what stake each company will have in the casinos, if Genting wins any of the bids. Universal Studios Recreation Group spokesman Wyman Roberts couldn't immediately be reached for a comment.

"We believe we're putting in a highly exciting proposal and if we're given the opportunity, we'd be able to make it a success the moment the doors open," Lim said in an interview on April 8.

Singapore's cabinet will decide whether to allow a casino to be built at a downtown site, on Sentosa, or at both locations. The decision will be announced in parliament on April 18.

Genting would fund development of a Singapore resort project with a combination of new shares, bonds and bank loans, Lim said. The company may sell shares in a Singapore unit once the business is "successful," he said.

Las Vegas-based Harrah's, which is bidding with Keppel Land Ltd., the city-state's No. 3 developer by assets, has also said it plans to sell shares in any Singapore casino.

Genting and Universal, which runs theme parks in Florida, California, Barcelona and Osaka, would develop a theme park on Sentosa if they win that bid. A park could help Singapore reach its goal of doubling annual arrivals to 17 million people and tripling tourism revenue to S$30 billion by 2015.

Walt Disney Co.'s Hong Kong Disneyland, which is scheduled to open Sept. 12, is expected to provide a boost to that city's economy, CLSA Ltd. said in a research report last week.

The inclusion of Universal in its bid "gives Genting a bit of an edge," said Edward Ong, an analyst at Macquarie Research in Kuala Lumpur. Universal Parks & Resorts, which runs Universal Studios' theme parks, is a unit of General Electric Co.

Genting shares, which had risen 6.1 percent in the past two days, closed 10 sen lower, or 0.6 percent, at 17.40 ringgit at the 5 p.m. close in Kuala Lumpur. They have fallen 8.4 percent this year.

Singapore, which received 19 development proposals, will ask for a second round of bids before deciding on the winner. The government wants the city's casino to be a landmark development that will lure tourists to the city-state.

Wynn Resorts, led by Las Vegas billionaire Steve Wynn, said its Singapore bid would include an "iconic" design. Harrah's hired Studio Daniel Libeskind, whose founder is designing the 1,776-foot Freedom Tower at Ground Zero in New York, to design its downtown development.

Las Vegas Sands has said it may include a Guggenheim-themed museum in its proposed casino development. Hong Kong, which plans to develop a cultural district on the Kowloon peninsula, has said it may include a Guggenheim art museum to replicate the success of the facility built in Bilbao, Spain.

"Originally, people thought it was just about a casino license" for Singapore, HLG's Lai said. "Now there's a different dimension."

Genting plans to further expand its hotel and leisure businesses to reduce its reliance on Malaysia, where its operations range from power plants and oil-palm plantations to property development and paper manufacturing.

Genting's Resorts World unit, which runs a casino, hotel and theme park in Malaysia, controls Hong Kong-based Star Cruises, the world's third-largest cruise line. Genting also owns stakes in London Clubs International Plc, owner of 11 British casinos, and Stanley Leisure Plc.