KUALA LUMPUR (Oct 12): Genting Bhd (KL:GENTING) fell to its lowest in nearly two decades after the gaming conglomerate announced a RM1.25 billion cash call to pare down borrowings.

Analysts, meanwhile, see sharp dilution to earnings and dividend on a per share basis from the proposed rights issue. Maybank Investment Bank downgraded Genting to ‘sell’ while CIMB Securities warned of selling pressures ahead for the stock.

“While a rights issue does not mathematically destroy shareholders wealth, investors usually view such exercises negatively as it replaces cheaper debt with more expensive equity,” CIMB Securities said.

Shares of Genting fell as much as 32 sen or 17.02% to RM1.56, its lowest since April 2007. The stock was trading at RM1.60 at 9.30am as nearly 16 million shares changed hands. The sharp fall wiped out over RM1 billion from its market capitalisation in less than 30 minutes of morning trading.

The selling pressure also spilled to listed subsidiary Genting Malaysia Bhd (KL:GENM), which declined 12 sen 8% to RM1.37.

More to come