Aug 16, 2019 Newsdesk Latest News, Top of the deck, World
Casino operator Genting Malaysia Bhd has defended a deal to acquire a stake in loss-making Empire Resorts Inc, owner and operator of Resorts World Catskills, a property located about 140 kilometres (90 miles) from New York City, in the United States.
Genting Malaysia said in a filing to Bursa Malaysia on Thursday that it had “carefully evaluated the investment into Empire Resorts and has deemed it a worthwhile investment based on numerous factors.”
The filing added that the deal would place the Malaysia-based firm “in a position to more deeply access the New York market and provide both Genting Malaysia and Empire Resorts the opportunity to compete more effectively in north-eastern U.S. region’s current competitive gaming landscape.”
Genting Malaysia was replying to a query from Bursa Malaysia Securities Bhd, the exchange operator, over its decision to acquire a stake in Empire Resorts. The latter firm is 88.7 percent owned by Kien Huat Realty III Ltd, the family trust of Lim Kok Thay, the controlling shareholder of the Genting group.
The company added: “Genting Malaysia strongly believes that the proposal is the best alternative available to Empire Resorts’ stockholders and that the proposal is also in the best interests of Genting Malaysia’s shareholders.”
Genting Malaysia announced last week plans to acquire 13.2 million shares of the common stock of Empire Resorts held by Kien Huat Realty – which represent an approximately 35-percent stake in Empire Resorts – at an aggregate cash consideration of nearly US$128.6 million. The deal is to be done via Genting Malaysia’s subsidiary, Genting (USA) Ltd.
Genting Malaysia’s unit and Kien Huat Realty additionally plan to acquire the outstanding shares held by Empire Resorts’ minority shareholders, for US$9.74 a share. The deal would lead to the privatisation of Nasdaq-listed Empire Resorts.
Empire Resorts has been loss making for several years. The company posted a net loss of nearly US$138.8 million for the financial year ended December 31, 2018.
Empire Resorts said in a filing last week it was considering the option of filing for voluntary bankruptcy, in order to make it easier to restructure its US$533.68 million of long-term debt.
The firm owns Resorts World Catskills, which commenced operations in February 2018 and features a 332 all-suite hotel, 1,600 slot machines and over 150 live table games, according to company information. Empire Resorts also owns the Monticello Casino and Raceway, which features horse racing operations.
Genting Malaysia currently has no involvement in the management of Resorts World Catskills. The firm already owns a property in the region, called Resorts World Casino New York City.
“Genting Malaysia, because of its established management in New York, is in a unique position to take advantage of synergies between its existing operations at Resorts World Casino New York and the Resorts World Catskills,” Genting Malaysia said in its Thursday filing. It added: “This will provide both Resorts World Casino New York and Resorts World Catskills with economies of scale resulting in a net cost reduction, thus improving earnings.”
Genting Malaysia stated in its filing that, based on the company’s analysis from public filings of Empire Resorts, it believed “that, with immediate improvements to Empire Resorts’ operations… Empire’s present liquidity challenges can be met.”
The company added: “Resorts World Catskills is one of the newest and highest quality gaming assets in the northeast U.S., with over US$900 million invested. It is one of the closest gaming facilities to New York City offering live table games including baccarat and blackjack.”
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