KUALA LUMPUR (Nov 10): Genting Bhd (KL:GENTING) said it has issued bonds for a nominal value of RM900 million on Monday to part-finance the acquisition of Genting Malaysia Bhd (KL:GENM) shares under the takeover offer announced last month.
The medium-term notes have a one-year tenure and carry an interest rate of one-month KLIBOR plus 1.80% per annum, said Genting in a bourse filing. The one-month KLIBOR rate stands at 3%, implying an effective annual interest rate of 4.8%.
In a separate announcement, Genting said it now holds 52.63% of Genting Malaysia shares following further open-market purchases and additional acceptances under its takeover offer.
The takeover bid became unconditional on Nov 3 after Genting crossed the 50% ownership threshold. The offer, announced on Oct 13, was priced at RM2.35 per share — representing nearly a 10% premium to Genting Malaysia’s last traded price of RM2.14 on Oct 10, before the stock was suspended for the announcement.
Analysts have raised concerns that Genting’s debt-funded acquisition could further strain its already heavy debt burden and materially weaken its credit quality. Moody’s Ratings previously noted that if the offer is fully accepted, the deal would cost Genting RM6.3 billion, financed primarily through new borrowings.
Moody’s already regards Genting’s credit metrics as “stretched”, with its adjusted debt-to-Ebitda ratio having exceeded the 4.0 times downgrade threshold for several years. Additional debt from the acquisition is projected to push this ratio to about 5.1 times in 2025, heightening leverage pressures and delaying any meaningful debt reduction.
Genting has indicated that it does not intend to maintain Genting Malaysia’s listing status. If successful, the privatisation would mark the exit of a company that has been listed on Bursa Malaysia for nearly four decades.
With the acceptance condition now met, the offer will remain open until Nov 24, unless extended or revised.
Genting shares rose six sen or 1.8% to RM3.46 on Monday, giving the group a market capitalisation of RM13.41 billion. Shares in Genting Malaysia, meanwhile, edged up one sen or 0.4% to RM2.35.