KUALA LUMPUR: Genting Malaysia Bhd (GenM) will be injecting US$40 million (RM174.8 million) cash into loss-making Empire Resorts Inc, which it bought from its chairman Tan Sri Lim Kok Thay.
In an announcement to Bursa Malaysia, GenM said it had entered into a subscription agreement with Nasdaq-listed Empire Resorts to subscribe for the latter’s Series G Preferred Stocks, with a maturity date of Dec 31, 2038. The preferred stocks are convertible into ordinary shares at US$20 per share.
All in, GenM will have spent a total of close to RM714 million for a 34% equity stake in Empire Resorts that runs Resorts World Catskills (RWC), a casino resort on a 1,700-acre (687.97ha) site in Sullivan County, New York. It is approximately 90 miles (144.84km) from New York City.
Shortly after GenM announced the share acquisition, Empire Resorts revealed that it was facing a liquidity problem so severe that it has prompted the New York-based casino operator to consider filing for voluntary Chapter 11 bankruptcy.
GenM, which has temporarily shut down its operations in New York and Malaysia due to the Covid-19 outbreak, explained that the equity injection would enable Empire to continue to focus on strengthening RWC’s operating performance to realise its full potential.
“The equity injection would enable Empire to have funds for refinancing and provide additional funds for its working capital, if deemed required in view of the recently announced temporary closure of Resorts World Catskills by the authorities due the Covid-19 pandemic,” said GenM.
“Since its opening in February 2018, RWC’s operations have continued to improve. RWC registered a 48% year-on-year growth in total gross gaming revenue (GGR) to US$208.7 million from US$140.6 million.
“Strategic efforts that capitalise on synergies with Resorts World Casino New York City have generated positive results for RWC with continuing GGR growth of 31% for the first two months of the financial year ending Dec 31, 2020 compared with the corresponding period in 2019,” it added.
GenM’s share price plummeted to a near 10-year low of RM1.91, valuing it at RM10.77 billion. It has skidded 51% from its one-year peak of RM3.90 since July 2019.
http://www.theedgemarkets.com/article/genting-malaysia-inject-rm1748m-empire-resorts
