Genting Said to Seek Approval to Raise Echo Stake Above 10%
Companies linked to Genting Bhd. (GENT) and its Chairman Lim Kok Thay sought approval for boosting a stake in Echo Entertainment Group Ltd. (EGP) above 10 percent, said a person with knowledge of the matter.
Genting made the application to the Independent Liquor & Gaming Authority in New South Wales state, said the person, who asked not to be identified because no announcement has been made. A filing was also lodged with the Office of Liquor and Gaming Regulation in Queensland state, the person said.
The move by Kuala Lumpur-based Genting signals its intention to match billionaire James Packer’s bid for greater control of Echo, which also operates three casinos in Queensland state. Packer’s Crown Ltd. (CWN), the owner of casinos in Melbourne and Perth, has a 10 percent stake in Echo and applied to raise the holding in February.
Shares in Echo rose 0.7 percent to A$4.22 at 1:49 p.m. in Sydney trading today, taking this year’s gain to 23 percent. The benchmark S&P/ASX 200 index dropped 0.6 percent today. Genting Singapore Plc (GENS) and Genting Hong Kong Ltd. (GENHK) hold a combined 9.9 percent of Echo, operator or Sydney’s only casino, after buying shares in the market last week.
Genting Bhd. controls Genting Singapore, Asia’s second- biggest gambling company by market value, which runs one of only two casinos in the city-state. Genting Hong Kong operates cruise ships and part owns a casino in the Philippines. The company is 57 percent owned by the family of Lim Kok Thay, according to data compiled by Bloomberg.
Scott Tucker, a spokesman for the New South Wales government, said he couldn’t immediately comment on Genting’s application, as did Susan Grantham, a spokeswoman for the Office of Liquor and Gaming Regulation in Queensland.
Echo, which operates the Star casino in Sydney, this month outlined plans to raise A$454 million ($455 million) selling new shares at a discount to reduce debt and expand its high-roller program.
The company, vying with Crown for a greater share of high- stakes gamblers, said June 15 that earnings before interest, tax, depreciation and amortization will be A$270 million to A$315 million in the year through June 30 amid “difficult” conditions. That was as much as 29 percent below analyst estimates compiled by Bloomberg at the time.
Echo’s former Chairman John Story stepped down June 8 after Crown called a shareholder meeting to vote on his removal and ran advertisements in local newspapers criticizing the company’s “underperformance” under his leadership.
Packer said Story needed to take responsibility for the “fiasco” at Echo’s Star casino in Sydney, after managing director Sid Vaikunta left the company Feb. 2 following an investigation of sexual harassment claims.
Perpetual Ltd. (PPT), an Australian fund manager, in November sought regulatory approval to raise its stake above 10 percent, head of equities Matt Williams said in May. It has since cut its holding in Echo to 4.2 percent, according to data compiled by Bloomberg.
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