Genting Malaysia Bhd has subscribed for US$15 million (RM50.85 million) worth of mortgage notes issued by the subsidiaries of Wynn Resorts Ltd as the former looks to further diversify away from its domestic turf.
“The notes represent a good opportunity for Genting Malaysia to expand its investment portfolio and enhance returns on its existing cash balances,” it said in a statement issued via Bursa Malaysia yesterday.
As of June 30, 2009, the casino operator had over RM5 billion cash and cash equivalents. Genting Malaysia said Wynn Resorts offered the notes as part of the latter’s private placement exercise.
The subscription of the notes came about four months after Genting Malaysia bought a 3.2% stake in the biggest operator on the Las Vegas Strip, MGM Mirage.
Wynn Resorts, a leisure and gaming corporation listed on Nasdaq, had on Oct 9, announced that its units, Wynn Las Vegas LLC and Wynn Las Vegas Capital Corp would be issuing US$500 million worth of new 7.875% First Mortgage Notes due 2017.
Genting Malaysia said yesterday its unit, Resorts World Ltd, had completed the subscription to US$15 million nominal amount of the notes.
“With yield returns in excess of 8%, the investment generates an attractive return compared to what is currently attainable in the money markets or in other secured investments regionally, especially within the Genting Malaysia group’s core leisure and hospitality industry,” it added.
The gaming giant added that the notes were secured against quality gaming and entertainment assets in Las Vegas.
Genting Malaysia said the proceeds would be used by Wynn to settle some of its outstanding debts and for general corporate purposes.
It said the subscription to the notes was not expected to have a material impact on the net assets or earnings per share of the Genting Malaysia group for the year ending Dec 31, 2009.
Genting Malaysia also has investments in Singapore and Hong Kong-listed Star Cruises Ltd (SCL), its 19.58% associate company. The purchase of MGM earlier this year signalled that a global expansion is underway for Genting Malaysia and triggered speculation that it could also buy out MGM’s stake in its Macau unit.
Wynn also has operations in Macau via its unit, Wynn Macau.
Wynn is one of the leading casino entertainment providers in the United States, owning and operating two PROPERTIES [] in Las Vegas, Nevada. For the financial year ended Dec 31, 2008, the Wynn group recorded net revenues of about US$3 billion.
On Oct 9, Wynn completed a successful initial public offering for Wynn Macau on the Hong Kong Stock Exchange, raising over US$1.87 billion in new equity.
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