GGRAsia – Empire Resorts to go private, merge with Lim family entities

Empire Resorts to go private, merge with Lim family entities

Aug 21, 2019 Newsdesk Latest News, Top of the deck, World

Loss-making United States-based casino operator Empire Resorts Inc has told Nasdaq it has agreed to a merger deal to take the firm private. The deal is with entities that are ultimately controlled by Malaysia-based casino dynasty the Lim family.

Empire Resorts has been in the red 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 a fortnight ago 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.

Empire Resorts owns and operates Resorts World Catskills, a casino complex in upstate New York, approximately 90 miles (144 kilometres) from New York City. It opened in February 2018 and has a 332 all-suite hotel, 1,600 slot machines and over 150 live table games, according to company information.

The target firm also owns and operates Monticello Raceway, a horse racing facility in Monticello, upstate New York.

As of August 18, Kien Huat Realty III Ltd – the family trust of Lim Kok Thay, a businessman who is the controlling shareholder of the Genting group, a Malaysia-based casino and plantations conglomerate – already held approximately 86 percent of the voting power of Empire Resorts’ capital stock, according to a Monday filing by the American firm.

Under a deal announced on Monday, affiliates of Kien Huat Realty III and Asia-based casino operator Genting Malaysia Bhd will acquire all of the outstanding equity of Empire Resorts not currently owned by Kien Huat or its affiliates.

According to a Tuesday filing by Genting Malaysia to Bursa Malaysia, a subsidiary – Genting (USA) Ltd – will pay US$128.6 million for 13.2 million units of Empire Resorts’ common stock – held by Kien Huat Realty III – at US$9.74 per share.

Genting USA will also contribute US$9.4 million in cash to a new joint venture vehicle established for the merger deal. Kien Huat Realty III will contribute just over 15.7 million shares it will hold in Empire Resorts once the proposed deal is closed, and will receive US$9.4 million in exchange.

Ryan Eller, president and chief executive of Empire Resorts, was quoted in a Monday a press release from the casino firm, filed with Nasdaq, as saying: “With the resources and support of Kien Huat and Genting Malaysia, Empire Resorts will be better positioned financially and operationally…”

The deal is subject to regulatory approval in the U.S. Under the deal, each issued and outstanding share of Empire Resorts’ common stock – at par value of US$0.01 per share – will be converted into the right to receive US$9.74 in cash, without interest.

The purchase price represents a premium of approximately 15 percent over the closing share price of Empire Resorts’ common stock on August 16, according to the Monday press release issued by Empire Resorts.

A fortnight ago - prior to the announcement of the merger proposal – Genting Malaysia had flagged its intention to take an approximately 35 percent stake in Empire Resorts, by acquiring a stake from Kien Huat Realty. Once the merger deal is completed, Genting Malaysia will own 49 percent of the joint venture that controls Empire Resorts.