A minority shareholder of Empire Resorts – the parent company of embattled New York casino Resorts World Catskills – is suing the company over privatization plans involving Genting Malaysia and the family trust of Genting boss Lim Kok Thay.
According to local media outlet Times Herald-Record, David Mullen launched the suit earlier this week against Empire Resorts, its Chairman Emanuel Pearlman, board members Keith Horn, Gerard Ewe Keng Lim, Edmund Marinucci and Nancy Palumbo, Genting Malaysia and Lim’s Kien Huat Realty III. The suit claims Empire and its associates are steering the company towards privatization against the interests of other shareholders.
As previously reported by Inside Asian Gaming, Genting Malaysia has entered into a binding term sheet with Kien Huat Realty III Ltd – which already holds an 86% stake in Empire Resorts – for the company’s wholly-owned subsidiary Genting (USA) Ltd to acquire 13.2 million shares in Empire, equivalent to a 35% stake. In turn, Kien Huat will acquire all remaining Empire shares and form a new joint venture entity to be 51% owned by Kien Huat and 49% by Genting (USA) Ltd.
Genting Malaysia says it wants to better position the Resorts World brand in the region through cross-marketing with Resorts World Casino New York City, attract additional customers from other states via those marketing efforts, achieve significant upside through revenue and cost synergies associated with providing arm’s length operating services to Empire, and leverage Genting Malaysia’s experience in the leisure and hospitality industry to enhance Empire’s ramp-up.
A Special Committee of the board of directors of Empire Resorts has already recommended that shareholders approve the merger, with a vote expected to take place before the end of the year.
However, Mullen’s suit alleges Empire did not provide enough information for shareholders to properly assess the offer by Genting Malaysia and Kien Huat Realty III Ltd, that the deal was endorsed to financially benefit Empire board members and that any potential third-parties had been scared off making offers of their own. It also questions how Genting’s offer price of US$9.74 per outstanding share was arrived at, suggesting the Empire shares may have been undervalued.
Neither Empire not Genting Malaysia has offered any comment on the suit.
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