Genting provides additional $100 million to New York casino sector
Genting Malaysia is again funding its troubled Empire Resorts unit, this time pledging $100 million to the New York casino operator.
In a new regulatory filing, Genting Malaysia told investors that the $100 million flowing to Empire Resorts will come from the parent company purchasing the preferred shares. The preferred shares are convertible into shares of Empire Resorts common stock after December 31, 2030. Empire Resorts will use $58 million of the proceeds to repay existing bank loans and use the remainder for general corporate purposes.
News of the investment comes 13 months after Genting Malaysia acquired US$100 million worth of preferred shares from the New York casino company. With the recent capital increase in Empire, the parent company has invested nearly $725 million in the loss-making unit.
Preferred stocks are considered hybrid securities because the shares have characteristics of both stocks and bonds. Such stocks often pay high dividends, making the asset class vulnerable to rising interest rates. However, preferred stocks are attractive to investors because the company must pay these dividends first.
The Tough Story of Empire Resort
Previously, Empire Resorts was a publicly traded company, and a struggling one at that. The company filed for bankruptcy protection in 2019 before being privatized by Kian Huat Properties III and Genting. The companies own 51% and 49%, respectively, of the New York gaming company.
The company operates Resorts World Catskills, Monticello Raceway, New York Sportsbook and Resorts World Hudson Valley. Empire Resorts does not control the Resorts World slot machine site in Queens, which is competing for one of three casino licenses in downstate New York.
Some analysts believe Genting Malaysia's latest move to shore up Empire Resorts may be an attempt to curry favor with New York regulators. Resorts World in Queens is rumored to be a leading contender to win one of three New York City area casino hotel licenses.
"In addition, it will enable Resorts World of the Hudson Valley to grow more quickly and enable Empire to continue its focus on strengthening Resorts World Catskills' operating performance to fully realize its potential.”
Genting has a New York mentality
New York regulators likely won't announce the winners of the state's three licenses until late this year or later. But Genting Malaysia has shown its commitment to its operations in the fourth-largest country.
Additionally, some analysts believe the company's financial support for Empire Resorts is at or near the end.
"The proposed capital injection will also enable Genting Malaysia to strengthen its position and expand its market presence in the expanding New York State gaming market to compete effectively in the Northeastern United States." "Resorts World Catskills will continue to benefit from New York City can benefit from operational synergies with the resort," the operator added in the filing.
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Source: www.casino.org
