Bimini 'operational challenges' contribute to Genting's 80 per cent profit fall

Mon, Mar 3rd 2014, 11:05 AM

Malaysia-based conglomerate Genting has reported an 80.5 percent drop in its net profits in the fourth quarter, citing losses in part due to start up costs and "operational challenges" in its Resorts World Bimini operation (RWB) on Bimini.
However, the company has promised in its latest filings that it "remains committed on stabilizing operations there".
"In the United States of America and The Bahamas, higher revenue was attributed to higher volume of business from the operations of Resorts World Casino New York City (RWNYC), and contribution from Resorts World Bimini (RWB) in The Bahamas upon the commencement of its operations on 28 June 2013," the company said.
"However, the leisure and hospitality segment in the U.S. and The Bahamas suffered an adjusted loss on earnings before interest, tax, depreciation and amortization (EBITDA) due to the loss suffered by the Bimini operations as a
result of operational challenges associated with the start-up of its operations, partially reduced by higher EBITDA from RWNYC operations."
While revenue was up in the fourth quarter of 2013 over the same period in the previous year for Genting's US and Bahamas operations, from $203 million Malaysian ringgits to R$237 million, profit before tax slipped from R$49.8 million to a loss of R$21.2 million, offset only slightly by profits in Genting's Resorts World New York operations.
For the fiscal year overall, profits were up slightly for its US and Bahamas operations, from R$173.2 million to R$185.8 million.
The outcome contributed to an overall fall of profits for the conglomerate for the period to $1 billion, as opposed to $2.969 billion in the same period last year. Genting's business ranges from leisure and hospitality to energy to oil palm plantations.
Reuters news agency said that the sharp drop also partly reflected an inflated figure a year earlier due to profits from the sale of two power plants. Profits were also down significantly in its Singapore gaming operations.
Their latest results came out on Thursday, the same day as the Bimini Blue Coalition welcomed news that their judicial challenge of the RWB's efforts to construct a ferry terminal to which their Bimini Superfast ferry can dock at Bimini will get a second chance.
The Bimini Blue Coalition had been seeking a judicial review of the legality of work to construct the ferry terminal in Bimini, along with an injunction to stop the work until this was determined, but had seen their efforts brought to a halt in December 2013 when Justice Hartman Longley called upon the group to put up $650,000 in security for costs in advance, in case they lost the matter.
Longley had called last December for the group to put up the funds by Friday February 28th, or face an automatic dismissal of their case.
On Thursday, the Court of Appeal gave the Bimini Blue Coalition an extension of time to appeal the decision of Justice Longley after the group failed to do so within the initial 14 day window. The appellate court also stayed an order of Longley's from February 14th which had mandated that unless the group paid the security for costs by Friday, they would see their judicial review action completely dismissed.
The Bimini Blue Coalition's appeal against the security for costs order will now be heard on March 25th. In filings in November 2013 to support its judicial review application the Bimini Blue Coalition told the court that the "threat to Bimini's future is substantial" from the construction of the ferry terminal and an accompanying 4.5 acre man-made island off the coast of Bimini.
Responding to the ruling on Thursday, Michelle Malcolm, director of public affairs for Resorts World Bimini, said: "Resorts World Bimini respects the position of the Court of Appeals and will provide all materials requested as we have in the past. We have always followed the proper procedures to seek approvals and will continue to work with the Bahamian Government to do so in the future."
The Bimini Blue Coalition's efforts to stop the terminal were not the major issue affecting the profitability of Resort's World Bimini's operations, however.
A legal challenge in the US courts against the company's night cruises, which stopped the company being able to use its Bimini Superfast vessel to offer night "cruises to nowhere" which allowed passengers to gamble offshore. The cruises complimented its day time trips, and in filings in the court case in which the US Customs and Border Patrol claim they violated the law because the crew were non-US, it said that without them its Bimini operations would be placed "in peril" as the night cruises were generating key revenue, while its Bimini operations went through the start up phase.
In late January, Genting lost an appeal against the court's ruling which stopped the trips.
Genting's response: "We respectfully disagree with the ruling and are evaluating all options, including appeal. This decision does not impact our ability to conduct day cruises, which will continue without interruption."
Resorts World Bimini is currently in the process of investing $150 million into Bimini, as part of a plan which will include a 350 room marina hotel and 50 villas. It has also been involved in an effort to obtain one of the contracts available under the Bahamas Electricity Reform process in recent months, although the current status of its bid is unclear.
At the same time, Genting has become a major player in the Miami development market, and is progressing with a mixed-use development plan at the former Miami Herald site. When it initially purchased the property it had announced plans to launch a large casino in downtown Miami on the site. However, these plans have since become less popular with Miami authorities.
Genting announced on January 9th that it hopes to use a Broward racetrack's second, dormant casino license to open a 2,000 machine slots parlor in a building known as the Omni Complex off Biscayne Boulevard. Genting paid more than $420 million for this property, along with the former Miami Herald building, in 2011. It is unclear how the establishment of more gaming facilities by Genting in Miami could impact demand for its Bimini casino and Bimini Superfast ferry service.

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