Genting Hong Kong Ltd, an operator in casino cruise ship operations, is selling its entire stake in Australian gaming operator Star Entertainment Ltd. The sale via on-market disposals and a block trade amounts to a total consideration of approximately AUD273.4 million (US$212 million), the firm said in a filing.
The Hong Kong-listed company said its subsidiary Cheer Century Ltd had disposed of 6.6 million shares in the Australian firm, representing approximately 0.80 percent of the total issued shares of Star Entertainment. The total consideration of the on-market disposals on the Australian Securities Exchange was nearly AUD38.5 million, Genting Hong Kong said in its Thursday announcement to the market.
In addition, Cheer Century is selling a further 46.4 million shares in Star Entertainment to third party purchasers via the Australian branch of banking group UBS AG, representing approximately a 5.62-percent stake in the Australian casino firm. The total consideration of the block trade was AUD235.2 million, said Genting Hong Kong.
UBS agreed to underwrite and guarantee the sale, according to Thursday’s filing. The block trade is expected to be completed on July 18, following which Genting Hong Kong will cease to hold any interest in Star Entertainment.
Genting Hong Kong said it would record a gain of about US$67.5 million from the block trade and from the earlier disposals.
The Hong Kong-listed firm said the proceeds from the transaction “will be used as general working capital and capital expenditure … and/or to fund new investments … should suitable opportunities arise”.
Genting Hong Kong – a subsidiary of Malaysian conglomerate Genting Bhd – has been accelerating expansion plans for its cruise business and has developed a three-brand portfolio of cruise lines serving different parts of the market: Crystal Cruises for what it terms the ultra-luxury segment; Dream Cruises for what it describes as the premium segment; and Star Cruises for what it defines as the “contemporary” segment.
Star Entertainment owns and operates The Star Sydney casino hotel (pictured) in Sydney, as well as the Jupiters Gold Coast and the Treasury casino in Queensland’s state capital, Brisbane. In October, the firm was formally granted a casino licence for Queen’s Wharf Brisbane.
The Australian Financial Review reported that Australian market rival Crown Resorts Ltd or related entities may have bought some of the shares sold by Genting Hong Kong. The newspaper quoted sources it did not identify.
According to Australian media, there has been recent speculation about a merger between the two Australian casino companies.
Citigroup – in a report about a “hypothetical” tie-up between the two gaming firms – said that enhanced operational scale and market share, cost savings and an improved growth outlook were all positive reasons for a course of action.
The Citigroup analysts said that – assuming Crown Resorts offered AUD6.45 cash per share in Star Entertainment – there could be 19 percent to 22 percent of earnings per share accretion for Crown Resorts in the second and third years after the merger, reported The Australian newspaper.
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