Friday, March 02, 2007

Will Genting miss the Singapore jackpot?

Just when the casino projects are starting to gain momentum, a bombshell has been dropped on the proceedings. In an officially released statement, it said that Singapore awarded the Genting International-led group the right to develop an "integrated resort" on the city's Sentosa island and the issuance of a casino license was a "separate matter." What this means that even after they have fully constructed everything, they might still not be allowed to operate the casino.

"The procedure is when they finish building everything, they have to apply for a casino license and based on the criteria the government judges them by, they will grant the license," said Winston Liew, an analyst at OCBC Investment Research. "That's the original tender conditions. It's not new."

While the statement is in conflict with general belief that Genting, with its partner Star Cruises, will be running the show in Sentosa, it is consistent with the government's earlier statements. When the Singapore Tourism Board asked for bids for both resorts in 2005 and 2006, it said the operators could only apply for a casino license when at least half of the proposed gross floor area had been completed, and at least half of the committed investment had been expended.

The statement was in response to media queries after newspapers reported the government was concerned over the group's partnership with Macau casino owner Stanley Ho. Ho and other investors said they will hold a combined 6.99 percent stake in Star Cruises, which in turn owns 25 percent of Singapore's second casino-resort. The Singapore government said that it will not grant the gaming license unless the operator and its associates have a good reputation and sound financial background. It defined an associate as anyone who holds "any relevant financial interest," or holds the position of a director or manager, or has voting rights.

While the apparent lack of assurance in securing a casino license caused a drop in the shares of Genting International and Star Cruises, Genting International said in response it's "committed" to the resort and to meet the "suitability requirements" of the authorities for a casino license in Singapore. Perhaps it is not time yet for Genting to be cashing in their chips. What do you think?