Will Genting’s Hong Kong plight affect its units in Malaysia, Singapore amid the Covid-19 pandemic?
- Group chief Lim Kok Thay has pledged nearly all his stake in embattled Genting Hong Kong as collateral for loans, after it suspended payments to creditors
- Analysts say his decision puts the company at risk of a margin call, while the situation could adversely affect investor sentiment towards listed units overseas
Lim on Thursday pledged nearly all of his 76 per cent stake in Genting Hong Kong as collateral for loans after the company’s stock plunged 38 per cent, a day following its announcement that it would suspend all payments to creditors in a bid to maintain critical services.
Analysts say his decision may increase the risk of a margin call, which could mean having to increase collateral, or even lead to shares being sold on the open market to recoup funds – pushing the stock price even lower.
The Genting empire, which owns and manages resorts, cruises and casinos across the world, has been headed since 2003 by Malaysian tycoon Lim, the second son of founder Lim Goh Tong. It is also involved in property, plantations, energy and life sciences.
Lim – who holds a controlling stake in the units listed in Hong Kong, Malaysia and Singapore – has seen his fortune drop to a current value of US$700 million excluding pledged shares, down from US$1.5 billion at the beginning of the year.
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The Genting units had their first-ever group-wide salary reductions earlier this year, while Genting Malaysia in June said it was cutting thousands of jobs. According to Genting Berhad’s annual reports, Lim as of March had pledged 32 per cent of his shares in the company as collateral.