GGRAsia – Genting taking US$150mln Empire stock, more funds needed

Genting taking US$150mln Empire stock, more funds needed

Sep 14, 2020 Newsdesk Latest News, Rest of Asia, Top of the deck, World

An indirectly-held unit of casino operator Genting Malaysia Bhd has agreed to subscribe for up to US$150 million – or approximately MYR625 million – of ‘series L’ preferred stock in United States casino business Empire Resorts Inc.

Genting Malaysia added that the U.S. business would need further short-term funding in the next six months, due to the timing of a separately-planned bond offering having been affected by the Covid-19 pandemic.

Empire Resorts – the operating entity at Resorts World Catskills in upstate New York - was acquired last year by Genting Malaysia and vehicles held by Genting’s controlling Malaysian dynasty, the Lim family.

Friday’s filing to Bursa Malaysia by Genting Malaysia said the proceeds from the US$150-million stock subscription by Genting Malaysia’s indirect wholly-owned subsidiary Genting ER II LLC would be used by Empire Resorts for “working capital and financing purposes”.

Resorts World Catskills reopened to the public on September 9, having been shuttered since March 16, as a precaution against the spread of Covid-19.

Genting Malaysia noted in its Friday filing that Empire Resorts “will require funds to fulfil its short-term debt obligations within the next six months,” while work proceeds on a bond offering announced in July, seeking to raise US$475 million in senior secured notes.

That exercise was to refinance Empire Resorts’ “existing short-term financing facilities, fund interest reserve for the senior secured notes,” and provide “excess liquidity for working capital purposes”.

However, the completion of the bond offering had been “impacted by the Covid-19 pandemic”, said Genting Malaysia.

“In view of the reopening of Resorts World Catskills, Empire [Resorts] is working with its financial advisors on a new timeline to approach the debt markets,” added Friday’s filing.

The statement to the Malaysian bourse further noted: “The disruption to Empire [Resorts’] operations caused by the pandemic resulted in a significant adverse impact on its liquidity.”

The Malaysian casino firm added Empire Resorts had sought to “mitigate” that, via “aggressive cost control measures, including reducing employee costs through furloughs and deferment of non-essential capital expenditure”.

Genting Malaysia further highlighted in its Friday announcement that Empire Resorts had completed a US$550-million short-term refinancing plan in March 2020, via a combination of bridge loan facilities and a fixed-term loan, resulting in a “significant lowering of interest rates”.

The proceeds from that exercise had been used to repay existing debt amounting to US$540 million and “financing-related expenses”.

“The completion of the short-term financing facilities allowed Empire [Resorts] to continue working on its long-term financing plan,” noted Friday’s filing.

The Genting group also runs the Resorts World Casino New York City, a so-called racetrack casino.

The Genting group’s Genting Malaysia – which has its main operation at Resorts World Genting, Malaysia’s only licensed casino resort – reported a nearly US$216-million loss in its second-quarter results. It also mentioned that its revenue from leisure and hospitality operations in the U.S. and the Bahamas – including casino operations – was negative by MYR31.6 million in the three months to June 30, versus a positive number of MYR378.1 million in the prior-year period.