Genting Malaysia to inject another US$100 mil fresh capital into Empire Resorts

KUALA LUMPUR (Jan 10): Genting Malaysia Bhd announced that it will inject another US$100 million (RM464.15 million), through an indirect wholly owned unit, into Empire Resorts Inc, in which it has already put in about US$624.4 million to date.

The latest capital injection will involve Genting Malaysia subscribing to 1,000 of Empire’s Series M preferred stocks. Empire plans to use the capital injection for working capital, and to pay off a US$58 million bank facility.

The Series M preferred stocks, with a maturity date of Dec 31, 2038, are convertible after end-2030 into 100 million common Empire stocks at US$1 apiece.

If the conversion does not take place before the maturity date, these preferred stocks will be automatically converted into 100 million Empire common stocks at US$1 apiece.

The latest equity injection will be funded by internal funds, said Genting Malaysia in a stock exchange filing on Wednesday.

The injection will enable Empire to further optimise its capital structure by reducing its financial leverage and corresponding interest expense, Genting Malaysia said.

“In addition, this will allow a quicker ramp-up for Resorts World Hudson Valley, and enable Empire to continue its focus on strengthening Resorts World Catskills’ (RWC) operating performance to realise its full potential."

This equity injection will also enable Empire to “reinforce its position, and grow its market presence in the expanding New York state gaming market to compete effectively in the north-eastern US region".

“RWC will also be able to continue benefiting from the operating synergies with Resorts World New York City,” it added.

Genting Malaysia owns a 49% stake in Empire, while the founding Lim family’s private vehicle Kien Huat Realty III Ltd owns the remaining 51%.

If all of Empire’s preferred stocks currently held by Genting Malaysia — not including the 1,000 preferred stocks it will be taking up in the latest equity injection — are converted or automatically converted upon maturity, the public listed entity would end up with a 76.3% stake in the financial year ending Dec 31, 2030.

Genting Malaysia said this round of equity injection is not subject to shareholders’ approval, hence it is unclear whether minority shareholders are happy to shoulder Empire's financial requirements together with the Lim family or not.

Shares in Genting Malaysia slipped three sen or 1.04% to close at RM2.85 on Wednesday, giving it a market capitalisation of RM16.92 billion.