RELATED party transaction (RPT) may not be the only concern lingering in the mind of Genting Bhd and Genting Malaysia Bhd shareholders even with analysts not expecting ‘large impact’ from the ill-fated Genting Hong Kong Ltd which has no cross-shareholdings with the Genting Group operations in Malaysia and Singapore.
This is because the Genting Group has a dismal past track record of leveraging “indirect channels to make ends meet” in time of financial turmoil, the consequences of which can be detrimental to investors.
In August 2019, Genting Malaysia forged ahead with a related party transaction (RPT) to acquire an effective 35% stake in cash-strapped US casino operator Empire Resorts Inc from its controlling shareholder Lim, 70, who is also the company’s CEO and chairman although such action was met with intense criticism.
Some RM3.27 bil of market capitalisation evaporated from Genting Malaysia as it came under fierce selling pressure since the announcement of the RPT that will cost RM538 mil cash. Genting Bhd, too, was not spared from heavy selling with RM2.54 bil in its market cap being wiped out.
Amid a bearish market sentiment that besets Bursa Malaysia, Genting Bhd erased 16 sen or 3.56% at the close of today’s mid-day trading to RM4.33 with 9.38 million shares traded, thus valuing the company at RM16.79 bil.
When news broke out of its chairman and chief executive Tan Sri Lim Kok Thay stepping down as chairman and CEO of Genting HK yesterday (Jan 24) – days after the cruise operator said it would wind up its business after failing to secure funding to pay off its debts – Genting shed 8 sen or 1.75% to close at RM4.49.
Meanwhile, Genting Malaysia slipped 5 sen or 1.8% to RM2.73 with 6.45 million shares traded which gives it a market capitalisation of RM16.21 bil. Yesterday, it edged down 7 sen or 3.46% to RM2.78.
Beyond RPT, recall that Lim took home a hefty RM74.81 mil in salary and bonus in 2019 even after taking a pay cut of up to 30% since March 2020 when COVID-19 started hitting hard.
This came as Genting posted a net loss of RM1.02 bil for the financial year ended Dec 31, 2020 against a net profit of RM2 bil in FY2019 while revenue fell 46.5% to RM11.56 bil from RM21.62 bil.
The group attributed the lower financial performance to mainly the group’s leisure and hospitality division that was adversely affected by temporary closures of leisure properties worldwide due to lockdowns implemented by respective governments to curb COVID-19, and the subsequent resumption of business with reduced capacity.
Of the RM74.81 mil, the amount is 32.4% lower compared with the RM110.73 mil that Lim received in 2019, according to the group’s annual reports for the two years.
In terms of total remuneration, however, Lim’s package of RM151.34 million in 2020 is a tad bit higher than RM151.09 mil in 2019. The slight increase was due to “other short-term employee benefits” totalling RM51.34 mil that he received in 2020 compared with RM420,000 in 2019.
Meanwhile, Genting Singapore said it has decided to disregard a resolution passed at an extraordinary general meeting (EGM) on Feb 4, 2020 following recent fallout over the amount of remuneration paid to Lim as its chairman in 2020.
The decision was revealed in April 2021 following conclusion of the company’s annual general meeting (AGM) with Genting Singapore pointing to Resolution 3 of the EGM to “increase the limit of the size of the PSS (performance share scheme) Share Awards to the Chairman.”
In late March 2021, Genting Singapore revealed in its 2020 Annual Report that Lim’s total remuneration for the year had almost doubled to between S$21.25 mil (RM66.24 mil) and S$21.50 million (RM67.02 mil) despite the company seeing its net profit fell 90% year-on-year to S$69.2 mil (RM215.71 mil) due to the COVID-19 pandemic. – Jan 25, 2022
