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Malaysian Company Refutes Casino License Rumors

Posted on September 27th, 2010

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These days, news of any company getting into ventures for casino projects does a lot more good than bad to the company’s image. That is exactly what happened to Karambunai Corp Bhd (KCB), a Malaysian company, when its shares suddenly experienced a surge in value because of certain speculations that the firm may get into bidding for a casino license, which was rumored to be a part of its planned integrated resort (IR) project in its already operating Sabah facility. While the market was reportedly excited with the development, which caused the firm’s stocks to appreciate in value, the company dampened the mood by negating the rumors. The company released a statement to the Malaysian press to this effect. The statement included, “KCB has not up to date submitted any official proposal to the Malaysian government, nor has it penned any written documents with any other third parties in respect of any plan to build a casino in Karambunai.”

The statement moved on to other things like the general manager of the Nexus Karambunai Hotel, one of its resorts, being invited to be a member of the NKEA tourism lab of PEMANDU, or the government’s Performance Management and Delivery Unit, by virtue of KCB playing an important role in the tourism industry of Sabah. The statement elaborated by stating, “During the lab sessions, KCB’s representative has been discussing and disclosing drawings in Karambunai with members of the private and public sectors as to the manner in which Karambunai as a member of the private sector may assist in this direction.” KCB further explained that there have been drawings that were made during lab sessions and Pemandu is free to use any of them. Karambunai, although maintaining copyrights source and status to these drawings, also clarified that these are just plans, and that it was just mentioned that KCB has an integrated resort in Kota Kinabalu, Malaysia.

Any mention or reference to a casino being placed in the resort was just one of the ideas presented in the lab, which were not even passed as final plans. The market was witness to the phenomenal rise of the company’s share over the past trading sessions, where the usually loss-making shares experienced a 227 percent rise. On Tuesday, price per share was at 5.5 sen, and by Thursday, it has gone up to 18 sen, when news of the probability that Malaysia may issue another casino license to the company started spreading. A head of a research house opined that the probability of having a second casino in the country would be a bit close to impossible, as there is a lot of opposition to be faced, including political opponents, which may prove to be more difficult to face than socio-civic resistance. Genting Malaysia Bhd, current sole license holder of operating a casino in Malaysia, had to face numerous opposition groups before it became successful.

As of the moment, it may be another group that will oppose a second license to be granted to anyone, as a new casino may pose a threat to its establishment. Moreover, another gambling activity, sports betting, has been proposed, but has also faced protests from various sectors. References to successful casinos present in integrated resorts such as those in Marina Bay Sands of Singapore and Resorts World in Manila being discussed in a panel meeting of Pemandu sparked the rumors of the probability of a second casino in Malaysia. The EPP presentation, which was public, had made the development proposals of KCB on its resort in Sabah as one that would feature waterfront living facilities, a mangrove plantation and even a water park. These rumors were further flamed by performance figures released by the company, which posted a bit of improvement in its income, with losses decreasing by RM0.2 million on the first quarter compared to figures from a year ago. The company’s revenue experienced an increase of RM 1.7 million, from RM 22.3 million for the first quarter of 2009 to RM 24 million for the first quarter of 2010.

KCB has connections in Hong Kong by way of NagaCorp Ltd., which has a common stockholder with the company. KCB has Chen Lip Keong as its president while Chen is NagaCorp ‘s CEO. NagaCorp has casino operations in Cambodia as well.