KUALA LUMPUR, Feb 12 — Genting Singapore Plc’s indirect associate Stanley Genting Casinos Ltd has sold Stanley Casinos (Leeds) Ltd to Stanley Casinos Holdings Ltd for just £1 (RM5.55).

The casino-operator said the £1 consideration was justified as the net asset value of Stanley Genting Casinos (Leeds) Ltd was negative.

In other words, Stanley Genting Casinos (Leeds) Ltd had net liabilities on its books.

In its announcement, Genting Singapore also said that Palomino Sun (UK) Ltd has sold a 0.1 per cent stake Stanley Genting Casinos Ltd to Stanley Casinos Holdings Ltd for £5,900 which was based on the net asset value of Stanley Genting Casinos Ltd.

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Genting Singapore invested in Stanley Genting Casinos Ltd more than a decade ago.

In November 2004, Genting Singapore Plc (then known as Genting International Plc) formed a 50-50 joint venture with the United Kingdom’s largest casino operator Stanley Leisure Plc to develop regional casinos in the UK.

The joint venture company was named Stanley Genting Casinos Ltd.

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As a part of the joint venture agreement, Stanley Leisure Plc sold Stanley Casinos (Leeds) Limited to Stanley Genting Casinos Ltd for an undisclosed cash consideration.

The key asset of Stanley Casinos (Leeds) Ltd was that it had an option to acquire certain land adjacent to Elland Road in Leeds.

As per the terms of the joint venture, in the event that consent is not given to build a regional casino on this land, it will be sold back to Stanley Leisure at cost.

Investor Central. We keep your investments honest.

1. How much did Stanley Genting Casinos Ltd pay for Stanley Casinos (Leeds) Ltd?

We wonder that because that would help us estimate the value of the option that Stanley Casinos (Leeds) Ltd had to acquire land adjacent to Elland Road in Leeds for building a casino on it.

2. How much did Stanley Leisure Plc contribute for its 50 per cent stake in the joint venture?

Genting Singapore paid £5.4 million in cash for its 50 per cent stake in Stanley Genting Casinos Ltd.

However, we don’t know how much Stanley Leisure Plc contributed for its 50 per cent stake in Stanley Genting Casinos Ltd.

This is important because it would help us estimate the worth of Stanley Genting Casinos Ltd.

3. Is Stanley Genting Casinos Ltd an ‘indirect associated company’ or is it a ‘joint venture’?

In its January 27 announcement, Genting Singapore said Stanley Genting Casinos Ltd is its ‘indirect associated company’.

But as mentioned above and as recorded in its annual reports, Genting Singapore accounts for Stanley Genting Casions Ltd as a ‘joint venture’.

So, which of the two is correct?

4. Is Genting Singapore compliant with Chapter 9 of the Listing Manual?

A couple of years after forging a joint venture with Stanley Leisure Plc, Genting Singapore acquired Stanley Leisure Plc for £639 million.

According to page 90 of Genting Singapore’s 2010 annual report:

‘Stanley Genting Casinos Limited (“SGCL”) is a 50:50 joint venture held by Palomino Sun (UK) Limited and Stanley Casinos Holdings Limited, both of which are indirect wholly-owned subsidiaries of the Company via Genting International Limited and Genting UK plc respectively.’

In other words, Stanley Genting Casinos Ltd was now an indirect subsidiary of Genting Singapore.

Subsequently, in a related party transaction on October 15, 2010, Genting Singapore Plc sold its UK casino operations to Genting Worldwide (UK) Ltd — an indirect wholly owned subsidiary of Genting Malaysia Bhd — for S$737.6 million (refer page 78 of its 2010 annual report).

As a result, Stanley Casinos Holdings Ltd, which owned a 50 per cent stake in Stanley Genting Casinos Ltd, ceased to be a subsidiary of Genting Singapore Plc and became a subsidiary of Genting Malaysia Bhd.

Therefore, Genting Singapore Plc’s stake in Stanley Genting Casinos Ltd dropped to 50 per cent on October 15, 2010.

Now that Genting Singapore has announced it would sell a 100 per cent stake in Stanley Genting Casinos (Leeds) Limited to Stanley Casinos Holdings Ltd — which is a subsidiary of Genting Malaysia Bhd — for just £1, it is apparently a related party transaction.

In its January 27 announcement, Genting Singapore did mention that Stanley Casinos Holdings Ltd is an indirect subsidiary of Genting Bhd.

Tan Sri Lim Kok Thay, the Executive Chairman and shareholder of Genting Singapore, is also the Chairman, Chief Executive Officer, and shareholder of Genting Bhd.

That’s why it said Tan Sri Lim Kok Thay abstained from all resolutions and deliberations relating to the sale of a 100 per cent stake in Stanley Genting Casinos (Leeds) Ltd and a 0.1 per cent stake in Stanley Genting Casinos Ltd.

In its announcement, Genting Singapore also said that both transactions are not ‘discloseable’ under Chapter 10 of the Listing Manual.

However, the company didn’t mention if the transactions were in compliance with the Chapter 9 of the Listing Manual which deals with related party transactions.

5. What was Stanley Genting Casinos (Leeds) Ltd really worth?

Genting Singapore sold a 100 per cent stake in Stanley Genting Casinos (Leeds) Ltd to Genting Malaysia Bhd’s subsidiary Stanley Casinos Holdings Ltd for just £1 as it had a negative net assets value.

So, what was the net asset value of Stanley Genting Casinos (Leeds) Ltd?

As already highlighted, Stanley Genting Casinos (Leeds) Ltd had an option to acquire certain land adjacent to Elland Road in Leeds, UK.

Any reasonable investor would wonder if it still holds that option or whether it has been already exercised.

And if it still owns that option, what is its market value?

Did Genting Singapore consider the market value of the option and/or land piece before it decided to sell Stanley Genting Casinos (Leeds) Ltd for £1?

Given that the buyer and seller are a part of Genting Group, one wonders if the sale of Stanley Genting Casinos (Leeds) Ltd was precisely to transfer the land, or the option to acquire it, from Genting Singapore to Genting Malaysia Bhd.

And why would Genting Malaysia Bhd buy a 100 per cent stake in a company, which has negative net asset value unless it owns something valuable?

6. Why did Genting Singapore cede control of Stanley Genting Casinos Ltd to Genting Malaysia Bhd?

Genting Singapore’s indirect subsidiary Palomino Sun (UK) Ltd reduced its stake in Stanley Genting Casinos Ltd to 49.9 per cent, by selling a 0.1 per cent stake to Genting Malaysia Bhd’s indirect subsidiary Stanley Casinos Holdings Ltd for £5,900, based on its net assets value.

Apparently, Stanley Genting Casinos Ltd had a net asset value of £5.9 million.

Now, Stanley Casinos Holdings Ltd is the controlling shareholder of Stanley Casinos Holdings Ltd with a 50.1 per cent stake in it.

Therefore, that makes us wonder why Genting Singapore decided to let Genting Malaysia Bhd own a controlling stake in Stanley Genting Casinos Ltd which has net assets of about £5.9 million.

Also, what is the market value of Stanley Genting Casinos Ltd’s net assets?

7. How much penalty has the Casino Regulatory Authority imposed on Resorts World Sentosa?

According to a news report, Casino Regulatory Authority has fined Marina Bay Sands S$65,000 and issued two letters of censure to Resorts World Sentosa for social safeguard breaches between July 1 and December 31, 2013.

Marina Bay Sands was fined another S$45,000 for allowing two visitors with exclusion orders to enter the casino.

Resorts World Sentosa was penalised for allowing two Singaporeans without valid entry levies, the report added.

So, how much penalty has the regulator imposed on RWS?

We have invited the company to an on-camera interview, and/or to reply to our questions in writing.

At the time of publication we have not received a reply (which is why you are seeing this message).

We will update this report if we do.

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