Genting Malaysia invests another US$100m in Empire Resorts

• Genting Malaysia’s share price had come down after the the Malaysian casino and resorts operator announced its investment in Empire Resorts back in August 2019.

KUALA LUMPUR (Dec 6): Genting Malaysia Bhd said it is investing another US$100 million (RM438.5 million) to acquire convertible preferred stock in Empire Resorts Inc, raising its investment in the New York-based gaming company to US$624.4 million.

Genting Malaysia’s total investment in Empire Resorts includes an indirect ownership of 49% common stock, 100% of Series G and Series L preferred stocks.

Genting Malaysia’s share price had come down after the the Malaysian casino and resorts operator announced its investment in Empire Resorts back in August 2019.

According to Bloomberg data, although the stock has largely recovered to its pre-Covid-19 level, it has not reached the RM3.14-RM3.20 range seen in the beginning of August 2019.

On Monday (Dec 5), Genting Malaysia closed unchanged at RM2.64, giving the group a market capitalisation of RM15.68 billion.

The latest investment involves Genting Malaysia taking over a total of 1,510 Series F convertible preferred stock from Kien Huat Realty III Ltd, whose cost of investment amounted to US$151 million, according to the group’s Bursa Malaysia filing.

Kien Huat Realty III is wholly-owned by Blue Wood Ltd, an Isle of Man company which is wholly-owned by Golden Hope Ltd as trustee of the Golden Hope Unit Trust (GHUT).

Genting Malaysia chief executive and 49.99% shareholder Tan Sri Lim Kok Thay, and his son Lim Keong Hui, have indirect interests in Kien Huat Realty III by virtue of them being beneficiaries of the discretionary trust which owns 100% of the voting interest in GHUT.

 Series F preferred stock’s maturity date is Dec 31, 2038, and it is convertible into common stock between end-2030 until its expiry.

Assuming full conversion of Series F, G and L preferred stock in 2030, Genting Malaysia said its effective shareholding in Empire Resorts will increase to 76.3%, from 49% currently.

Genting Malaysia said the latest round of investment was to capitalise on Empire Resorts’ improving performances since the US company’s privatisation in November 2019.
 
“This is evident from its strong records of gross gaming revenues, which exceeded pre-pandemic levels for most of the months since May 2021,” said Genting Malaysia.

Empire Resorts recorded positive earnings before interest, tax, depreciation and amortisation (Ebitda) of US$30.6 million last year, the first time since its commencement of operations.

For the nine-month period ended Sept 30, 2022, Empire Resorts posted an Ebitda of US$31.8 million.

“With improving profitability and a brighter outlook, the proposed Series F acquisition sets the stage for Genting Malaysia to further capitalise on the growth prospects of Empire Resorts and reinforce its position in the New York State gaming market,” the group said.