Genting Exits S. Korea

The Hong Kong division of the Malaysian gaming company has shelved its plan to construct a casino on South Korea’s Jeju Island to concentrate on its casino cruise business, according to reports. Meanwhile, the firm’s Singapore arm recently saw shares drop 8.3 percent to the lowest close since August 2009.

Selling 50 percent stake

Less than 10 months after announcing that it would develop a casino on Jeju Island off the coast of the South Korean mainland, Genting Hong Kong is walking away from the joint venture with Hong Kong property developer Landing International Development Ltd.

The Grand Express Korea Co. Ltd. plan involved a renovated casino inside the Hyatt Regency Jeju Hotel, which opened in January. Genting will sell its 50 percent stake to Landing Intl for KRW 130 billion (US$111 million), the price it paid at the outset.

In announcing its withdrawal from the plan, Genting said it needs to “focus on and put more resources to expand its cruise and cruise-related businesses.” The company recently invested $550 million to buy Crystal Cruises LLC, a global luxury cruise line.

“The disposal transaction, if completed, will enable the company to focus on and put more resources to expand its cruise and cruise related businesses,” said Genting Hong Kong, adding it “will also enable the company to redeploy the cash proceeds flexibly to further explore and fund other investments and business opportunities as they may arise.” The deadline for the completion of the transaction is December 31.

The company is not totally out of the market, however. Its Genting Singapore Plc and Landing International Development are planning a new casino project called Resorts World Jeju. That development broke ground in February, reported GGRAsia.

Genting Singapore, meanwhile, took a recent hit after it warned of a significant fall in second-quarter profit on derivative and currency losses, reported Bloomberg News. The Singapore arm of the Malaysian casino giant lost 8.3 percent to close at 82.5 Singapore cents, the lowest level since August 2009. The decline was attributed to “fair value loss on derivative financial instruments” following unfavorable market conditions and unrealized foreign-exchange translation losses, Genting Singapore, which operates Resorts World Sentosa, said in a statement.

“Currency headwinds (have) been plaguing Singapore gaming operators for quite a while from all their primary segments such as China, Indonesia and Malaysia,” agreed Grant Govertsen, an analyst at Union Gaming Group in Macau. “That has been impacting results over the past several quarters.” Genting Singapore’s net income dropped 73 percent to S$62.7 million (US$45.4 million) in the quarter that ended March 31 as the company took a S$76.3 million impairment loss on trade receivables, Bloomberg noted.