KUALA LUMPUR: Genting counters are under pressure in early morning trade on news that Twentieth Century Fox has filed a countersuit against Genting Malaysia Bhd
over the scrapped theme park deal.
At 9.25am, Genting was down seven sen to RM6.60 while Genting Malaysia fell five sen to RM3.21.
The US$46.4mil (RM191.84mil) countersuit by Fox alleges that Genting Malaysia had breached its contract by failing to honour its commitments towards building the Fox-branded theme park in accordance to agreed-upon processes and deadlines.
"Time after time, Genting failed its commitments by ignoring the quality standards set forth in the agreement, Fox’s approval rights, and its deadlines," said Fox in the court filing.
"The fault for these failures lies with Genting, and Genting alone ... Genting’s failures to adhere to its obligations and deliver on the agreed-upon schedule resulted from a mixture of Genting’s incompetence, inexperience, and rank indifference to its contractual obligations".
Genting Malaysia said in a filing with the stock exchange that it is in the process of reviewing the issue with its legal counsels and intends to file a timely response.
In a research note today, Maybank Investment Bank research said the US$46.4mil counterclaim by Fox is "not new" in its view and accounts for under 1% of Genting Malaysia's market capitalisation.
It noted that Fox had not sought to preclude Genting Malaysia from opening the outdoor theme park, implying that it may be able to proceed with operating the facility by itself or partner with other studios.
"If it does, our SOP-based TP will be lifted to MYR3.65 to MYR3.30. Our earnings estimates, HOLD call and MYR3.30 TP are unchanged for now."
Fox's legal suit comes in response to Genting's own litigation against the US entertainment company, alleging that it had "fought GENM at nearly every turn, causing delay after delay".
The gaming company further alleged that Fox's new owner Walt Disney Co had wanted to cancel the deal so as not to tarnish its family brand by associating with a casino operator.
Genting Malaysia had said in its court filing against Fox that it had incurred US$750mil in costs for the theme park, and in October 2018 was already in its final phases of fabrication and installation ahead of its soft opening in the first half of 2019.