International edition
September 23, 2021

James Packer wants to use Echo's license to build new casino in Sydney

Genting raises Echo stake to near 10 %

(Malaysia / Australia).- Genting Group has increased its stake in Echo Entertainment to almost 10 percent, sources with knowledge of the matter said, putting the Malaysian gaming operator on par with billionaire James Packer seeking to gain control of the Australian casino operator.

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acker, who already owns 10 percent of Echo through Crown, wants to use Echo's license to build a new casino complex in Sydney to attract more Asian high-rollers and has already ousted the firm's former chairman.

"There may have been an agreement between Genting's KT Lim and Crown's James Packer that each group would hold a 10 percent blocking interest for now and wait to see what develops," said Peter Esho, chief market analyst at City Index. The pact could fend off potential hostile takeover bids, he said.

Australian media previously reported that Genting Chairman Lim Kok Thay, also known as KT Lim, had met with Crown officials in Macau to discuss their interests in Echo.

Genting bought 2 percent of Echo, or 13.8 million shares worth around us$ 60.6 million, in a single trade on Tuesday morning with Malaysian broker CIMB facilitating the deal, according to one of the sources and brokers in Sydney.

That follows a block trade by Genting's Hong Kong unit on Monday for 19.26 million Echo shares, or about 2.8 percent of the Australian company, worth us$ 83.4 million, according to a stock market filing by Genting Hong Kong.

Genting Singapore, another Genting unit, previously held an unspecified amount of Echo shares, which analysts say amounted to 4.9 percent. By that calculation, the latest deals would take Genting Group's stake through various group firms to 9.7 percent.

Under Echo's constitution, no single party can hold more than 10 percent and will need a regulatory nod to go further.

Genting probably has not made any firm decision on what to do with Echo but expects to gain regardless of whether it takes control of Echo or sells its stake later, said a Singapore-based analyst, who declined to be named.

Packer's hands were tied until regulatory approval was granted to increase its stake in Echo, a source close to Crown said, declining to be identified because the information is confidential. The permission may take at least a "few months" but added Packer is keen to work with Genting, the source said. Genting would be keen to avoid a messy takeover battle for Echo which could cost as much as us$ 4.54 billion, AmResearch analyst Gan Huey Ling wrote in a note on Monday.

"As Echo is currently undergoing a debt restructuring program, we reckon that it is unlikely that Crown or Genting Singapore would be making any takeover moves," she added, referring to Echo's new share offering currently underway to raise about us$ 458 million.
Echo shares fell 1.9 percent to us$ 4.29 on five times its average daily volume, while the broader Australian market closed 0.3 percent lower.

Genting Hong Kong, which is listed in the former British colony, is the Genting unit that owns Star Cruises and holds a stake in Philippine casino Resorts World Manila.

Genting Singapore owns Resorts World at Sentosa, the world's third-most expensive casino complex and one of the most profitable.

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