Echo Rises After Genting HK Seeks Bigger Casino Stake
Echo Entertainment Group Ltd. (EGP), operator of Sydney’s only casino, rose the most in almost four months after Genting Hong Kong Ltd. applied to raise its stake amid a fight for control with billionaire James Packer.
Echo’s shares climbed 3.4 percent to A$3.98 at the close of trade in Sydney, their sharpest gain since June 8.
Genting Hong Kong, a cruise ship company controlled by billionaire Lim Kok Thay, asked the New South Wales Independent Liquor and Gaming Authority for permission to increase its holding to 25 percent, the agency said in a statement on its website. The move intensifies Lim’s contest with Packer’s Crown Ltd. (CWN) for greater control of Echo, two weeks after Genting Singapore Plc (GENS), also controlled by Genting Bhd. (GENT) of which Lim is chairman, said it was selling its 4.8 percent stake in Echo.
Genting Hong Kong’s application “suggests they’re still interested in the asset,” Gary Pinge, an analyst at Macquarie Group Ltd. in Hong Kong, said by phone. Crown, which holds about 7.7 percent of Echo, has also applied to increase its stake to 25 percent.
The application announced today lifts the target above a 20 percent threshold at which companies must generally make a takeover offer under Australian corporate law. Genting Hong Kong applied previously to raise its stake above 10 percent, in accordance with provisions on local casino businesses.
The regulator and its counterpart in neighboring Queensland state are investigating the plan by the company, which has a 4.2 percent stake, according to the statement.
The Hong Kong-based cruise ship operator’s debt was rated below investment grade, or junk, by Moody’s Investors Service Inc. before ratings were withdrawn in 2009. Genting Singapore has an investment-grade Baa1 rating and held net cash of S$1.93 billion as of June 30.
A broker at Royal Bank of Scotland Plc was seeking a 5 percent stake in Echo at A$3.90 yesterday, and Genting Hong Kong was probably the buyer, the Australian Financial Review reported without saying where it got the information. Justin Gallagher, head of equity sales trading at the bank’s Sydney office, said he couldn’t comment.
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