Abbie Chadwick
Rating agency Fitch Rating reported that Genting Malaysia Bhd’s subsidiary Genting New York LLC would face fierce competition to obtain one of the three full-scale casino licenses in New York. On June 29, Fitch commented that Genting New York is likely to join the bidding process for a New York casino license but refrained from providing any forecast due to the variability of the situation. The company projected that this year, Genting Bhd’s profits are to reach 85% to 95% of its pre-pandemic levels.
According to Fitch, the contenders for one of the three downstate casino licenses in New York will face fierce competition. The bidding process is expected to be finalized by the first half of the next year. A minimum of $500 million capital investment is required to enter the bidding process. Successful bidders will also pay a gambling license fee of at least $50 million.
The agency stated that the number of visitors at Genting’s key venues in Malaysia and Singapore has rebounded since April 2022. This is largely due to the lifting of Covid-related restrictions. These venues account for over 60% of the group’s earnings before interest, taxes, depreciation, and other costs. The agency also noted that wage inflation is counterbalanced by a reduction in the company’s workforce in Malaysia.
The Sale of Genting Malaysia’s Miami Land Fails, But Company’s Financial Situation Slowly But Surely Recovers to Pre-Pandemic Levels
However, Fitch explained that Genting Malaysia is unlikely to fully recover to pre-pandemic levels in the coming three years because of the dramatic tax increase from Q2 2022. The rating agency projects that Genting’s earnings before interest, taxes, depreciation, and amortization (EBITDA) will decrease to 3.5 times in 2023, which is 4.1 times less compared to the previous year.
The Ebitdar net leverage calculation is based on the proportional consolidation of Genting’s three publicly listed subsidiaries, including GenM, Genting Singapore Ltd, and Genting Plantations Bhd. Additionally, the calculation also takes into account the associate company, Genting Empire Resorts LLC.
Last month, Genting Malaysia agreed to sell its 15.5 acres of waterfront land in Miami to an investment group called SmartCity Miami for $1.23 billion. Of all stakeholders, 979 greenlit the sale, while only 136 opposed the deal. In 2011, Genting acquired three parcels in Miami for $246 million, and in 2017, the company bought its fourth piece of land in Miami for $13 million.
Genting would realize a profit of over $960 million if the sale of the land proceeded. The company revealed its plans to invest the money from the deal into its Resorts World New York City. Genting is among the casino operators bidding for a full casino license in New York, which would allow for the addition of gaming tables. Unfortunately, SmartCity Miami shelved its plans to purchase the former Miami Herald property in Downtown Miami from Genting Group after Genting declined the buyer’s request to extend its exclusivity period and amend the terms of sale.