GEN Malaysia to inject US$100M new into Empire resort

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Casino developer Genting Malaysia Bhd said in a Wednesday filing that it had agreed to buy "Series M" preferred shares of U.S.-based casino operator Empire Resorts Inc. for up to US$100 million. Genting Malaysia said the proposed equity investment would be "financed through internally generated funds."
1,000 Series M Preferred Shares may be converted to 100 million Empire Common Shares at any time on or after December 31, 2030 (before the expiration date of December 31, 2038).
Empire Resorts became an affiliate of Genting Malaysia with vehicles owned by the Lim family, Genting's dominant Malaysian dynasty, in 2019.
Empire Resort has several U.S. gaming businesses. Casino Resort World Catskill, about 90 miles (144.8 kilometers) from New York City, which began operations in January 2019, World Hudson Valley, a resort described as a 90,000-square-foot (8,361 square meters) facility with 1,200 video lottery terminals, bars and lounges (opened in December 2022); and New York State's Mobile Sports Betting Operations, which began in March 2022.
Genting Malaysia, promoter of complex resort World Genting, Malaysia's only casino licensed, said the proceeds from the "Series M" subscription will be used by Empire to "fully repay working capital objectives and existing banking facilities of about $58 million," which is owned by Empire's holding company, Genting Empire Resorts LLC.
According to the filing, the equity injection "will allow the empire to further optimize its capital structure by reducing the financial leverage and corresponding interest expense of the empire and its Genting Empire resort."
"This will enable Resort World Hudson Valley to rise faster and allow Empire to continue to focus on strengthening the resort World Catskill's operational performance, enabling us to realize our full potential," it added.
Genting Malaysia also said the training will allow the group to "strengthen its position and grow its market presence in the expanding New York State gaming market to compete effectively in the Northeast."
Genting Malaysia is known as one of the potential bidders for one of New York's three gaming licenses. A number of investment analysts have suggested that Genting Group could be a leader there.
Maybank Investment Bhd said in a note Thursday that the latest deal involving Genting Malaysia and Empire "doesn't look friendly."
"That said, the room for more related party deals with empires seems to be narrowing," wrote analyst Samuel Insao.
After the latest equity investment, Genting Malaysia's effective stake in the empire "will increase from 76% to 90%, with total investment in the empire reaching $724.4 million," according to In.
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