Genting Malaysia’s loss-making Empire Resorts to sell non-gaming assets for RM2.2b to cut costs, clear debt

• Genting Malaysia said the deal will see Empire Resorts sell key non-casino properties—including the 332-room Resorts World Catskills (RWC) and the 99-room Alder Hotel, a 18-hole Monster golf course, the 2,500-seat RWC Epicenter, and restaurants—to a local development body, Sullivan County Resort Facilities Local Development Corporation (SCRFLDC), which will run them as public assets.

KUALA LUMPUR (Aug 15): After taking full control of its struggling US unit Empire Resorts Inc, Genting Malaysia Bhd (KL:GENM) is launching a major restructuring with a RM2.2 billion asset sale, land purchase and full bond repayment to address earnings pressure.

In a filing with the bourse, Genting Malaysia said the deal will see Empire Resorts sell key non-casino properties—including the 332-room Resorts World Catskills (RWC) and the 99-room Alder Hotel, a 18-hole Monster golf course, the 2,500-seat RWC Epicenter, and restaurants—to a local development body, Sullivan County Resort Facilities Local Development Corporation (SCRFLDC), which will run them as public assets.

SCRFLDC will run the acquired facilities as government-owned entities to create jobs, boost employment, reduce government burden and serve public interest.

Post-sale of the assets, Empire Resorts will lease the land under the non-gaming assets from SCRFLDC until February 15, 2066, and manage the assets under a 20-year agreement, with two automatic five-year renewals. Genting Malaysia said Empire Resorts and SCRFLDC are finalising terms for the sale, lease and management agreements.

Part of the sale proceeds from the sale of the non-gaming assets will be used to redeem US$300 million (RM1.3 billion) in bonds and buy 1,554.6 acres of land from EPR Properties—a US-listed real estate trust that invests in entertainment properties—for RM848.1 million.

The bond redemption will allow Empire Resorts, which has been posting losses for over two decades, to be debt-free.

The land purchase, in turn, will see Empire Resorts fully own 1,554.6 acres of debt-free land—including 420 acres upon which Resorts World Catskills’ assets sit and 1,134.6 acres of vacant land with development potential, giving it more control and room for future development.

Genting Malaysia said the restructuring will lower financing costs, boost Empire Resorts’ assets and add RM42.1 million in extra cash.

This latest corporate exercise follows Genting Malaysia’s US$41 million buyout of the remaining 51% of Empire Resorts from its founding Lim family two months ago—a deal that raised eyebrows for its diminishing nature. CIMB Securities said the takeover could lower Genting Malaysia’s core earnings by 3-4% over the next three years and increase its net debt by RM1.28 billion.

Genting Malaysia’s shares were up 0.5% to RM2.00 a share following the announcement, giving it a market capitalisation of RM11.34 billion. The stock is down 11.5% year to date.

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