KUALA LUMPUR (April 6): Genting Malaysia Bhd (GENM) is proposing to seek the approval of its shareholders to renew a mandate for the disposal by its indirect subsidiary Resorts World Ltd (RWL) of a 16.87% stake in Genting Hong Kong Ltd (GENHK) for another year.

This follows the coming expiry of its first disposal mandate on July 1.

As at March 28, 2016, being the latest practicable date prior to this announcement, RWL has not disposed of any GENHK shares and continues to hold 1.43 billion shares or a 16.87% stake in GENHK.

"Given that the validity period for the 2015 disposal mandate is expiring, the company proposes to seek the approval from its non-interested shareholders to renew the disposal mandate (at an extraordinary general meeting to be convened)," said GENM in a filing with Bursa Malaysia today.

Under the new mandate, RWL may dispose of the shares through transaction(s) done in the open market or off-market transaction(s).

"In view of the relatively low trading volume of GENHK shares, the board believes that having the off-market disposal(s) as one of the manners for disposal will provide flexibility to dispose of the disposal shares," said GENM.

Since the disposal may be implemented in tranches, it added that there could potentially be multiple disposal prices.

GENM said regardless of the manner of disposal, the minimum disposal price per disposal share shall not be less than US$0.29 (RM1.16), which would raise total gross proceeds of about US$415 million (RM1.67 billion).

"The minimum price will allow flexibility for the board to accommodate fluctuations in market conditions in the exercise of the proposed 2016 disposal mandate and at the same time, reflect the lowest acceptable price to dispose of the disposal shares," it noted.

"Based on the audited results of the GENM Group for the financial year ended Dec 31, 2015 and assuming that the entire disposal shares were disposed of on Dec 31, 2015 at the minimum price, the disposal is expected to realise a one-off proforma gain of about RM1.31 billion to the group," said GENM.

GENM also pointed out that its original cost of investment in the GENHK stake was US$604.1 million (RM2.42 billion), representing an average purchase price of US$0.42 (RM1.69) per GENHK share. The investment was made between 1998 and 2006.

As at Dec 31, 2015, the carrying value of the disposal shares was US$457.9 million (RM1.84 billion), representing the closing price per GENHK share of US$0.32 (RM1.28) as at that date.

GENM said the proceeds arising from the disposal may be used for investments and/or working capital.

"As part of GENM Group’s business strategies, the GENM Group will from time to time, identify and evaluate investment opportunities to strengthen and grow its business.

"GENM Group has yet to identify any investments at this juncture and therefore, the expected time frame for the utilisation of proceeds cannot be determined," it added.

GENHK's businesses comprise Star Cruises, Crystal Cruises, Dream Cruises and Resorts World Manila in the Philippines.

GENM shares closed 2 sen or 0.44% higher at RM4.57 today, bringing a market capitalisation of RM25.91 billion; while GENHK ended the day unchanged at HK$2.74, for a market value of HK$23.24 billion.