Question 1: Business Financing

The Genting Group was founded in 1965 by the late (Tan Sri) Lim Goh Tong who had a dream of building a resort in the mountain tops. Genting Berhads corporate profile states that it is an investment holding and management company which comprises various business stake under the Genting brand around the world (https://www.genting.com/corporate_profile/ ). The Covid-19 pandemic hit the gaming sector hard, Genting included. Genting Hong Kong for example, has applied for debt restructuring and Genting Malaysias affiliate Empire Resorts Inc New York plans to issue USD$475 million debt notes to boost their liquidity. In addition, Fitch Ratings have recently downgraded Genting Berhads credit rating to negative.

Based on the above scenario and in lay man terms, this would mean that there would be considerable re-strategizing where debt financing is concerned. On this basis, as a banker;

(i) Explain the difference between secure financing and unsecured financing with an example each. State if the credit rating that Genting Berhad is awarded by Fitch Rating is good.

(ii) Describe the types of charges that exist in debt financing and support the relevance of each with an example. Describe each type of charge that exists. Source an example of each type of charge that exists.

(iii) Explain which debt financing options will be most strategic given the current pandemic and why. Support with an example. Identify if the advantages of Debt Financing still subsist with the current pandemic Financial MindMap. Identify if the current way of setting up charges (Floating | Fixed | Debenture) is still suitable in the current pandemic. Identify which type of financing (Secured or Unsecured) is seen as most suitable. Explain an example sourced from strategies identified by financial entities / Institutions Financial institution can be international in nature. Identify if the strategy used by the Genting Group is reasonable. Identify if the strategy proposed by you this will be something that the Genting Group can consider.