PETALING JAYA – The opening of a new theme park based on the 20th Century Fox World of Design is supposed to boost the number of visitors to Genting Highlands for the next two years from June 2019.
However, it is not going to happen – sparking a setback for Genting Malaysia. It's efforts to boost visitor numbers.
Shares in Genting Malaysia is a heavy beating store yesterday as the opening theme park, that is under construction at Genting Resorts World, hit a snag.
This came after Genting Malaysia said he had filed legal suits against 21st Century Fox Inc. and Walt Disney Co.
The RM4.5 billion (S $ 1.47 billion) 20th Century Fox World theme park was supposed to have been completed by the end of last year, but the opening was pushed back to the middle of next year.
"Without the theme park, it is uncertain what the catalyst would be to increase the number of visitors to Genting Highlands." This is important for Genting Malaysia, "said an analyst, adding that the company is expected to shed some light on the matter by the end of the week.
In a filing with Bursa Malaysia yesterday, Genting Malaysia said it was claiming more than US $ 1billion (S $ 1.37 billion) for the cost of investments, as well as consequential and punitive damages.
Shares in Genting Malaysia plunged 60 cents or 16.7 per cent to close at RM3, wiping out RM3.4 trillion from its market capitalization.
The counter topped the volume list with 276.3 million shares changing hands.
The impact was also felt at the parent company level – Genting Bhd – that saw its share falling price of 52 cents or 7.5 per cent to close at RM6.38.
Reuters, quoting the case file, reported that Disney wanted to end the contract because associating with a gaming company did not fit its "family-friendly" brand strategy.
Disney won 21st Century Fox's entertainment and media assets for US $ 71.3 billion two months ago.
This included the 20th Century Fox film and TV studio, which has the intellectual rights to design of the theme park.
Disney's takeover of 21st Century Fox's assets will be completed in the first quarter of 2019.
Genting said Fox is issued in a "entirely consistent with Disney wanting to kill the deal" to benefit itself.
"Given that Fox Entertainment Group has no right to terminate the agreement, Fox and Disney are liable for what will exceed US $ 1 in damages, it is attributable to bad behavior, both Fox and Disney," he said.
The filing also revealed that Genting had already made a "US $ 750 million-plus" investment in the Fox World.
Genting Malaysia entered into the licensing agreement with Fox in 2013 for the development of what would be the first Fox-branded theme park in the world.
Under the agreement, Genting Malaysia was granted a license to utilize the park under the Genting integrated tourism plan.
Analysts have started to take into account the delays in the opening of the theme park.
"Due to potential legal complications, we are concerned if Genting Malaysia can still open the theme park in the first-half of 2019," CIMB Research said in a report yesterday.
AllianceDBS Research reckoned that Genting Malaysia may seek other global partners to license the characters for its theme park.
"There could also be additional costs incurred to redesign the outdoor theme park due to the termination of the collaboration," he said.
It is worth noting that Genting Malaysia's share price has been under pressure since the beginning of the month after the government announced its decision to increase the casino tax.
The counter's market capitalization has been erased by RM8 billion since early this month. On a year-to-date basis, Genting Malaysia has declined more than 46 per cent to RM3.
The decline in critical-related stocks weighed heavily on the local benchmark index FBM KLCI performance yesterday.
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