Genting Berhad plans to fund the deal with RM6.3bn of new debt.
The bid is so that it can secure clear majority control of Genting Malaysia so as to better support its New York casino bid.
DBS Group Research notes that if Genting Malaysia wins the license, Genting Berhad's leverage would rise materially given the proposed US$5.5 billion investment.
Meanwhile, Genting Berhad, which controls SGX-listed Genting Singapore, may seek "higher-than-expected" dividends from the subsidiary entity to help fund group debt service.
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"Given Genting Singapore’s strong net cash position and robust free cash flow, we see higher dividends from Genting Singapore as the most probable avenue to support the group’s leverage," says DBS.
According to DBS, the consensus view is that Genting Singapore will pay a 4 cent per share dividend for the current FY2025, which will be unchanged from previous year, given "challenging operations".
"Any indication of a payout above this level could be a positive re-rating catalyst," says DBS, whose "hold" call and 80 cents target price remains.
Genting Singapore shares closed at 72 cents on Oct 13, unchanged for the day but down 7.14% year to date.
