Genting Malaysia Bhd’s move to acquire full ownership of loss-making, United States-based Empire Resorts Inc is seen as “credit negative” by two ratings institutions.
“The transaction, which is expected to be fully funded through Genting Malaysia’s internal cash, is credit negative for [the parent] Genting Bhd because of its related-party nature and the financial weakness of Empire,” stated Moody’s Ratings in a Tuesday memo.
Genting Malaysia announced on Friday that it was proposing to acquire the remaining 51 percent of Empire Resorts’ common stock that it does not yet own. The stake is controlled by the private investment vehicle of Malaysian entrepreneurs the Lim family, which also controls Genting Malaysia and its parent, Genting Bhd.
The deal involves a total cash consideration of US$41 million and is due to be completed by year-end. At the same time, a US$40-million debt previously owed by Empire to the Lim family’s private investment vehicle will now be owed to Genting Malaysia.
Empire Resorts owns three businesses in the U.S. state of New York: casino complex Resorts World Catskills (pictured); Resorts World Hudson, a casino offering video lottery terminals; and mobile sports betting operation Resorts World Bet.
Although Moody’s said it had already incorporated 100 percent of Empire Resorts’ debt and earnings before interest, taxation, depreciation, and amortisation (EBITDA) into the parent’s credit metrics, it observed: “Empire’s ongoing losses mean that Genting Bhd – through Genting Malaysia – may be required to continue providing equity support to Empire.”
The rating agency added: “Despite already receiving around US$750 million of equity support from Genting Malaysia, Empire still recorded a net loss of MYR252 million (US$59 million) in 2024.”
In a Tuesday note, CreditSights Inc said it maintained its “outperform” recommendation on Genting Malaysia, adding that the full acquisition of Empire Resorts was “in line with our expectation for the Genting group/promoters to continue rendering forthcoming support to Empire Resorts”.
“We view the acquisition as credit negative for Genting Malaysia, given it could worsen its pro-forma net leverage by 0.3 times to 0.4 times and raise related-party transaction concerns,” stated the institution.
It added: “While the acquisition further strengthens Genting’s New York operations, Empire Resorts’ earnings outlook is weak.”
Maybank Investment Bank Bhd said in a Monday memo that the investment bank was trimming its earnings estimates for Genting Malaysia for full years 2025 to 2027 by 2 percent to 4 percent, due to the higher economic interest the firm will hold in Empire Resorts.
