“This disposal allows Genting Malaysia to monetise its loss-making investment in Genting Hong Kong, which provides minimal income yield,” the Nikkei Asian Review (NAR) quoted Hong Leong Investment Bank analyst Lee Meng Horng as saying.
Lee calculated that Genting Malaysia received only RM106 million in dividends after investing about RM4.12 billion since 1998.
Proceeds, Lee added, could be put to better use as working capital and capital expenditure while allowing the company to maintain a net cash position.
Genting and its 49 per cent-owned Genting Malaysia are both controlled by chairman Lim Kok Thay and his family.
Golden Hope, a trust owned by Lim and his family, currently owns 47.22 per cent in Genting Hong Kong, according to the NAR report.
Genting Malaysia had been looking for a buyer for its entire interest in casino ship operator and Philippines casino investor Genting Hong Kong since July last year, according to a report in GGR Asia.
The stake – considered by the firm as a “non-core” asset – was controlled by an indirect wholly-owned subsidiary called Resorts World Ltd.
Genting Malaysia originally acquired the stake in Genting Hong Kong for USD604.1 million, said the GGR Asia report.
Genting Hong Kong, whose shares are listed in Hong Kong and also in Singapore, operates seven ships under its flagship brand Star Cruises.
Apart from cruise vessels, the company also has a shipbuilding business, while its associate Travellers International Hotel Group operates a casino resort in Manila, Philippines, said the NAR report.
Genting Malaysia said proceeds from the all-cash deal was expected to fund investments or working capital, although the company had yet to identify any specific investment.
Earlier this year, Genting said it would raise its capital outlay to RM10.38 billion – more than double its initial projection – to revamp its flagship resort in Malaysia under the Genting Integrated Tourism Plan, according to the NAR report.
The decade-long initiative involves the make-over of Genting Highlands.
Shares of Genting rose 0.9 per cent to RM8.00 while Genting Malaysia was up 1.1 per cent to RM4.60 on Tuesday. The benchmark FTSE Bursa Malaysia KLCI rose 0.5 per cent.