Malaysian Genting sole bidder left for New York slots licence

Proposals submitted by a consortium comprising SL Green, Hard Rock International and Clairvest Group and by Penn National Gaming did not comply with the paperwork requirements of the bidding process, New York Lottery said in a statement yesterday.

The two bidders did not submit signed copies of a prepared Memorandum of Understanding, instead offering altered versions of the MOU with more favorable terms for the bidding companies, New York Lottery said.

"The third proposal submitted by Genting New York appears to conform with all the requirements of the bid submission process and will continue to be evaluated," New York Lottery said. Genting New York is a wholly-owned subsidiary of Genting Malaysia.

New York Lottery added that if Genting New York's bid is accepted, it will make a recommendation on or before August 3 to New York Governor David Paterson, the Temporary President of the Senate and the Speaker of the Assembly.

Genting Malaysia, the operator of Malaysian sole casino, has been seeking acquisitions abroad to reduce its dependence on its domestic operations in a predominantly Muslim country, where gambling is a culturally and politically sensitive issue.

However, investors have been less than impressed by Genting Malaysia's planned overseas ventures. A proposal unveiled last week to take over the unprofitable U.K. casino assets of its Singapore affiliate, Genting Singapore, triggered a sell-down of its shares to a one year low.

Genting New York will be required to pay an upfront licensing fee of at least us$ 300 million should it succeed in its bid to operate the 4,500 terminal facility, the only one of its size within the New York City limits.

Given the nature of operations and high taxes applicable, Fitch expects profitability of this venture, if Genting wins the bid, to be considerably lower compared to its highly profitable gaming operations in Malaysia," Fitch Ratings said in a statement earlier this week.

Analysts estimated the New York venture will add 5 % to 10 % to Genting Malaysia's annual earnings. Genting Malaysia reported net profit of us$ 405.9 million in 2009.