Genting Malaysia has revealed plans to inject US$150 million into its recently acquired US subsidiary Empire Resorts after entering into an agreement to subscribe to Series L Preferred Stock.
The subscription agreement is the latest in a series of fund-raising exercises by Empire this year, including a US$550 million refinancing plan via bridge loan facilities and a fixed term loan, and US$475 bond offering in July.
According to a filing by Genting Malaysia on Friday, the additional US$150 injected via the subscription agreement will be used by Empire as working capital in order to resume operations at Resorts World Catskills (RWC) in New York, and to fulfill its short-term debt obligations within the next six months whilst it works on the bond offering.
Genting Malaysia currently holds a 49% stake in Empire, with the other 51% held by Kien Huat Realty III Ltd, the family trust of Genting Group Chairman Lim Kok Thay. The company said it can increase its stake to 57% should it convert this new Series L Preferred Stock into common stock although the earliest this could happen is 2030.
“The equity Injection will be funded through internally generated funds and/or bank borrowings, the mix of which has not been determined as at the date of this announcement,” Genting Malaysia said.
“The Equity Injection enables Empire to have funds for working capital for resumption of operations. In addition, Empire will require funds to fulfill its short-term debt obligations within the next six months. Empire will also be able to prove out its business plan and continue with its long-term refinancing plans.
“Additionally, the Equity Injection will enable Genting Malaysia to continue securing its position to participate in the prospects and future growth of Empire, particularly in relation to the Orange County Opportunity and the potential expansion of sports betting opportunities within the state of New York.”
Genting Malaysia said the operating performance of RWC had improved 31% since it implemented new management in 4Q19. The property had also generated EBITDA of US$2 million in the first two months of 2020 compared to an EBITDA loss of US$8 million over the same period in 2019.
However, “the unforeseen and unprecedented situation arising from the COVID-19 pandemic had impacted Empire’s turnaround and long-term refinancing plans.”