By Stella Goh

Malaysian tycoon Tan Sri Lim Kok Thay’s Genting Berhad operates casinos and resorts in Las Vegas and Singapore. It had to scale back to operation as countries impose lockdowns, while consumers shun cruises after a few ships became site of coronavirus outbreaks. The conglomerate, founded in Malaysia in 1965, is also involved in property, plantation and energy sectors as well as life sciences.

According to the Bloomberg-compiled prices, the Resort World Las Vegas US$1 billion 2029 bonds dropped 6.2 US cents to 93.5 cents on the dollar, poised for the largest decline since April. Resort World Las Vegas is a wholly-owned indirect subsidiary of Genting Berhad and the latter is the keep well provider for the securities.

The Malaysian tycoon Tan Sri Lim Kok Thay has pledged nearly all his stakes in embattled cruise operator Genting Hong Kong Ltd. As the collateral for loans, it triggering a 38% drop in the company’s shares raising the risk of a margin call and denting investing confidence in Lim’s wider business empire. According to Genting HK, the company’s remaining available cash will be reserved to maintain critical services for the group’s operations. While the company will endeavor to negotiate holistic debt restructuring solution for the current financial indebtedness of the company and continue to engage with interested parties identified by the funding advisors.

After the company announced it has suspended all the payments to the creditors in abid to maintain its critical services, the record of selloff came after. Currently, the stock lost almost two-third of its value since December, and the only part of Lim’s sinking empire amid the Covid-19 pandemic.

In earlier of this year, Genting Berhad’s Casino-to-Hospitality conglomerate and its units had their first-ever group-wide salary reductions and in June it was cutting thousand of jobs. According to the stock exchange filling at the end of last month, Lim has pledging more of his holdings as the shares have plunged. Almost 76% stake in Genting Hong Kong is now committed or 6 billion of shares. Currently, Lim’s fortune is now valued at about $700 million excluding pledged shares, down from 1.5 billion at the beginning of the year.

However, in time of tough market conditions, mortgage stocks sometimes turn into backyard fires, as tycoon have to increase the value of collateral to meet the bank’s demand for covering positions and sometimes are forced to sell assets at lower prices. As for risk in the stock market, the price of relevant stocks will fall further.

According to the Head of Research at CEB International Investment Corporation, the financial stress may push the owner to sell the asset, or liquidate the entire firm. Liquidation is not very likely, but there is such possibility if Lim doesn’t have money and cannot find a buyer for its assets.

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