Posted on: January 11, 2024, 05:28h.
Last updated on: January 11, 2024, 05:28h.
Genting Malaysia is once again providing support to its struggling Empire Resorts unit, with a commitment of $100 million to the New York casino operator.
In a new regulatory filing, Genting Malaysia told investors that the $100 million injection to Empire Resorts will come from the parent company purchasing that amount in preferred stock. These preferred shares can be converted into common equity in Empire Resorts after Dec. 31, 2030. Empire Resorts plans to use $58 million of the funds to pay off an existing bank loan and the remainder for general corporate purposes.
News of the investment arrived 13 months after Genting Malaysia purchased $100 million in preferred shares from the New York casino entity. With the most recent capital outlay to Empire, the parent company has invested nearly $725 million in the loss-generating unit.
Hybrid securities, which are preferred stocks, have both equity and fixed income traits, generally paying high dividends. But, rising interest rates can make them vulnerable. However, preferred stocks are attractive to investors due to the prioritization of dividend payments by companies.
Rough History for Empire Resorts
Empire Resorts was a publicly traded company in poor financial health, even filing for bankruptcy protection in 2019 before being taken private by Kien Huat Realty III and Genting. Those entities own 51% and 49%, respectively, of the New York gaming entity.
The company operates Resorts World Catskills, Monticello Raceway, sports betting operations in New York and Resorts World Hudson Valley. Empire Resorts does not control the Resorts World slots-only venue in Queens, which is competing to land one three downstate casino permits in New York.
However, the latest move to shore up Empire Resorts is speculated to be an attempt by Genting Malaysia to gain favor with New York regulators. The Resorts World location in Queens is rumored to be a leading contender to win one of the three licenses for a New York City-area casino hotel.
“In addition, this will allow quicker ramp up for Resorts World Hudson Valley and enable Empire to continue its focus on strengthening Resorts World Catskills’ operating performance to realize its full potential,” according to a regulatory filing from the Malaysian parent.
Genting Has New York State of Mind
It may be the second half of this year or later before New York regulators reveal the winners of the trio of downstate licenses, but Genting Malaysia is showing commitment to its operations in the fourth-largest state.
Additionally, some analysts believe the company is at or close to the end of its financial support of Empire Resorts.
“The proposed equity injection will also allow Genting Malaysia to reinforce its position and grow its market presence in the expanding New York State gaming market to compete effectively in the north-eastern US region. Resorts World Catskills will also be able to continue benefiting from the operating synergies with Resorts World New York City,” the operator added in the filing.