GGRAsia – Miami land deal a credit positive at GEN Bhd: Moody’s

Miami land deal a credit positive at GEN Bhd: Moody’s

Apr 28, 2023 Newsdesk Latest News, Top of the deck, World

Casino investor Genting Malaysia Bhd’s proposed disposal of several land plots in Miami, Florida in the United States, can boost the consolidated liquidity of its parent, Genting Bhd, says Moody’s Investors Service Inc. The ratings house adds that post transaction, Genting Bhd’s cash holdings on a pro forma basis are expected to be MYR27.3 billion (US$6.2 billion), from MYR21.9 billion as of December 31.

The total cash consideration for Genting Malaysia’s Miami land would be just below US$1.23 billion, according to a Thursday filing by that firm. Genting Malaysia had said it expected a gain of US$967 million from the disposal deal. It is a 49.5-percent subsidiary of Genting Bhd.

Moody’s said it expected the proceeds from the Miami land disposal would be used to support the Genting group’s “ambitious” expansion plans in the U.S., namely the pursuit of one of three downstate New York gaming licences.

“This will entail a significant cash outlay as the licence fees and capital investment requirements were set at a minimum of US$1 billion,” added Moody’s.

“At the same time, we believe prospective applicants will submit competitive proposals because of the opportunity to operate a casino in downstate New York, which is a densely populated and affluent location,” the institution nonetheless noted.

Genting Bhd’s ratio of debt to earnings before interest, taxation, depreciation and amortisation (EBITDA) could improve to around 4.0 times by 2024, from 5.3 times in 2022, the ratings house stated.

But it also cautioned that any “significant increase in debt to fund the company’s expansion ambitions will derail our expectation of deleveraging and indicate an aggressive financial policy, thereby exerting pressure on Genting Bhd’s rating”.