Genting Singapore (GENS) has proposed a renounceable rights issue of up to 2,043,716,096 new ordinary shares at an issue price of S$0.80/share on the basis of one (1) rights share for every five (5) existing shares. The issue price is at a 32.8% discount to GENS' closing of S$1.19. The rights issue is expected to raise gross proceeds of S$1.63b, which will be used to strengthen its balance sheet and facilitate future business expansion.

Our preliminary ex-rights target price is S$0.80. We foresee a potential selldown on GENS once the shares resume trading, but expect it to recover in the run up to the opening of Resorts World@Sentosa at the end of Dec 09 or 1Q10.

We expect Genting Berhad (BUY/RM6.88/Target: RM7.60) to fully subscribe for its entitlement. Its full entitlement would cost GENT S$0.84b (RM2.06b). GENT's gross cash stood at RM2.45b as at 30 Jun 09.