KUALA LUMPUR (Aug 13): Shares in Genting Bhd and Genting Malaysia Bhd (GenM) declined this morning after it emerged that Empire Resorts, Inc, in which GenM will buy a 46% stake from controlling shareholder Tan Sri Lim Kok Thay for US$128 million (RM538 million), is facing a liquidity problem so severe, it has prompted the US-based casino operator to consider filing for voluntary Chapter 11 bankruptcy.
To keep it going, Empire, in which Lim now controls 84% via Kien Huat Realty III Ltd, has revealed it is in dire need of fresh capital through a cash call, or a restructuring of its whopping debt of over US$400 million.
At 9.11am, Genting shed 0.81% or 5 sen to RM6.14 for a market capitalisation of RM23.80 billion while GenM lost 1.86% or 6 sen to RM3.16 for a market cap of RM18.76 billion.
The Edge Financial Daily this morning reported that the news sent the Nasdaq-listed company’s share price on a dive to as low as US$8.11 yesterday — down US$1.23 or over 13%. At the time of writing, it was trading at US$8.26 apiece, down US$1.08 or 11.56%.
Last Friday, debt-laden Empire highlighted to shareholders the option of filing for voluntary bankruptcy in the announcement of its second-quarter financials to the US Securities and Exchange Commission (SEC), noting the option would enable it to easier restructure its borrowings.
“We can offer no assurance that we will be in compliance with all obligations and covenants measured as of future quarterly periods within the next 12 months or that we will be able to obtain waivers or other relief from the lenders, if necessary.
“If the company determines to not make a specified equity contribution, or interest and principal payments as they become due, unless the lenders under the term loan facility and revolving credit facility waive or eliminate the financial covenants, or otherwise restructure our existing debt agreements, Montreign Operating [Company, LLC] will be in default under these agreements and the lenders under such agreements can immediately declare all loans due and payable,” said the US casino operator, adding that Montreign Operating would likely be unable to pay all such obligations.