Genting buy land next to Resorts World Bimini for RM78.7m

PETALING JAYA: Genting Malaysia Bhd is expanding its resort property in the Bahamas by buying a 16.2 acre land next to Resorts World Bimini US$24.6 (RM78.7 million).
Its indirect 70% owned subsidiary BB Entertainment Ltd (BBEL), which is the owner and operator of the Bimini Casino in Resorts World Bimini, entered into an agreement to buy the land from RAV Bahamas Ltd last Thursday.
"The land measuring 16.2 acres is located on the Bimini Islands, Bahamas. BBEL is constructing a 307-key hotel on the land and it is adjacent to the Resorts World Bimini," Genting Malaysia told Bursa Malaysia last Friday.
The group launched Resorts World Bimini in July 2013 in partnership with RAV, the resort owner.
RAV Bahamas has a 30% stake in BBEL, while the balance 70% is held by BB Investment Holdings Limited, an indirect wholly-owned subsidiary of Genting Malaysia.
As part of land deal, an existing indebtedness of US$66 million due by BBEL to the Genting Malaysia group will be capitalised into paid-up capital of BBEL.
"With this and following the completion of the acquisition, Genting Malaysia Group interest in BBEL will be increased to 78% and RAV's interest in BBEL will be reduced to 22%," it said.
"By acquiring the land, Genting Malaysia group will have better control in terms of planning for future development and expansion," the company said.
At the same time, BBEL had entered into an option agreement to acquire 103.4 acre undeveloped land from RAV at a price to be agreed upon by Genting Malaysia group and RAV, subject to an independent third party valuation.
"The entering into the option agreement secures the Genting Malaysia's group's right to buy the land which is located close to the land from RAV which can be used for future expansion when the option is exercised by BBEL. The option can be exercised at any time before March 19, 2016," it said.
Resorts World Bimini, a 750-acre beachfront resort property on North Bimini Island, contains a casino, villas, other accommodations, shopping and dining options such as restaurants and bars, resort amenities and the largest marina in the Bahamas. The Group also operates the Bimini SuperFast, a 32,000-ton cruise ship that sails between Miami and Bimini.
Meanwhile, Public Investment Bank (PIVB) reported that the construction of the new pier at Bimini island has been completed and the Bimini Superfast cruise ship will begin docking there from Sept 18 onwards. The Bimini Superfast is also expected to expand its ferry services mid-October.
"We expect Bimini's losses to reduce following the completion of the pier, which allows the Bimini Superfast to dock directly at Bimini island and reduces traveling time, as compared with the previous method of transporting passengers from the ferry to the island via small boats," said PIVB in a report.
It also noted that bidders for the four New York upstate casino licences presented their proposals to the Gaming Commission's site selection committee last week and the winning bids are expected to be awarded by year-end.
PIVB said Genting has reportedly submitted the most generous bid with its US$1.5 billion Sterling Forest proposal, including US$283 million in annual tax revenues to the state, financing the construction of a US$30 million new interchange, US$37 million annual contributions to local school districts and a US$450 million licensing payment that is way above the minimum fee of RM70 million required by the state.
"We believe the recent establishment of a RM5 billion MTN programme could be a show of financial muscle to fund any additional capital expenditure (capex) in the US, as the group's current net cash position of almost RM2 billion and strong annual cash flows are sufficient for its current capex needs in our view, the major one being RM5 billion earmarked for Genting Integrated Tourism Plan," it said.
PIVB maintained its neutral call on Genting Malaysia with an unchanged target price of RM4.35 based on expectations that the group's Malaysian operations will continue facing challenges during the ongoing refurbishment of Resorts World Genting.