KUALA LUMPUR: Majority of Genting Malaysia Bhd's loss-making Empire Resorts Inc stockholders have approved the proposed merger with the joint-venture company of GentingM and Kien Huat Realty III Ltd (KH).
“As part of the proposed merger and in accordance with the merger agreement, qualified shareholders of Empire will be entitled to receive in cash from JVCo US$9.74 (RM40.45) for each share of common stock in Empire held, ” GentM said in a statement to Bursa Malaysia on Thursday.
GentM said the stockholders of the US-based Empire Resorts gave their approval at a special meeting on Wednesday.
According to a filing to the US Securities and Exchange Commission, Empire Resources reported that holders of 36.33 million shares voted in favour while those holding 277,185 shares were against and those who owned 15,457 shares abstained.
Recall that in August, GentingM announced that its indirect unit Genting (USA) Ltd (GenUSA) was buying a 46% stake in the loss-making Empire Resorts for RM539mil.
Empire Resorts owns Catskills Casino in Upstate New York.It had further proposed a 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 Resorts 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.
GentM 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.
In early November, GenUSA purchased 12.20 million shares in Empire Resorts from KH for US$128.56mil (RM534mil) at US$9.74 per share.
Following the proposed acquisition, GenUSA held a 38.3% equity stake in Empire Resorts on an undiluted basis.
KH is a party related to GentingM by virtue of shared ultimate major shareholders, specifically Tan Sri Lim Kok Thay. GenM is 49.5%-owned by GENTING BHD.
In August, RAM Ratings viewed as credit negative GentM’s related-party acquisition of Empire Resorts.
It cautioned the acquisition could potentially weaken GenM’s credit strength. Continued substantial losses at Empire Resorts and a possible demand on resources to support it could erode the company’s balance sheet strength.
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