GenUSA buys shares in Empire Resorts for RM534mil

  • Corporate News
  • Wednesday, 06 Nov 2019

In a filing with Bursa Malaysia yesterday, the company said GenUSA had acquired the shares at US$9.74 per share on Monday.

PETALING JAYA: Genting Malaysia Bhd, via indirect unit Genting (USA) Ltd (GenUSA), has purchased 12.20 million shares in Empire Resorts Inc from Kien Huat Realty III Ltd (KH) for US$128.56mil (RM534mil).

In a filing with Bursa Malaysia yesterday, the company said GenUSA had acquired the shares at US$9.74 per share on Monday.

“Following the proposed acquisition, GenUSA now holds a 38.3% equity stake in Empire on an undiluted basis and 33.3% on a fully diluted basis, assuming full conversion of all preferred stock currently outstanding into Empire’s common stock, ” it said.

“The obligation of GenUSA and KH to consummate the proposed acquisition is independent of, and not conditional upon, the proposed merger, ” it said.

In August, Genting Malaysia announced that it was buying a 46% stake in the loss-making Empire Resorts for RM539mil. Empire owns Catskills Casino in Upstate New York.It had further proposed a joint venture (JV) between Genting Malaysia and KH to gain full control of Empire Resorts.

The JV was to resolve Empire Resorts’ current liquidity issue via privatisation and restructuring efforts. Empire Resorts’ earlier filing with the US Securities and Exchange Commission said that if it cannot secure financing to bail it out, it may have to go the bankruptcy route.Analysts had then said GenUSA would need to inject its 46% stake in Empire and pay KH an additional US$9.4mil (RM39mil) to be entitled to have a 49% stake in the JV company, Hercules Topco LLC.

Subsequently, GenUSA and KH will inject a further US$28.5mil (or RM119mil) and US$29.7mil (or RM124.1mil) respectively into Hercules, with most of the proceeds being used to fund the privatisation of Empire.

Genting Malaysia will fork out a huge US$167mil (RM692mil) cash to complete this JV proposal, including an initial stake acquisition of US$128.6mil (RM533mil) (or a 38% stake in Empire), US$9.4mil paid to KH and US$28.5mil (its 49% share of the cash infusion) to mostly fund Hercules to buy out minorities of Empire.Genting Malaysia saw a 5.25% jump in net profit to RM416.48mil for the second quarter to end-June, on the back of an improved hold percentage in the mid to premium players segment.

This was despite an overall decline in business volume for the gaming segment, primarily due to lower incentives offered to customers in line with the group’s cost-rationalisation initiatives.

On its prospects, Genting Malaysia said that challenging days are ahead for the regional gaming industry, particularly in the premium players segment, in light of the uncertain economic sentiment.

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