Asian casino operator Genting Malaysia Berhad could reportedly be obliged to invest up to $140 million into its embattled Empire Resorts Incorporated subordinate come October should it have failed to refinance the American enterprise’s long-term debt.
According to a report from Inside Asian Gaming, this is the opinion of international brokerage Nomura Securities Company Limited after the Kuala Lumpur-listed firm revealed plans late last week that are to see it purchase an additional $20 million in ‘Series L’ stock in the operator behind upstate New York’s Resorts World Catskills development.
Genting Malaysia Berhad has reportedly already invested some $190 million into Empire Resorts Incorporated over the course of the last year via two separate transactions including approximately $150 million in September. The source detailed that these injections were required due to coronavirus-related interruptions in its efforts to refinance the New York-headquartered subsidiary’s current long-term borrowings.
However, Nomura Securities Company Limited analysts Alpa Aggarwal and Tushar Mohata reportedly announced that the planned endowment by Genting Malaysia Berhad is destined to take the company’s rolling twelve-month investment into Empire Resorts Incorporated up to 4.8% of the enterprise’s net book value. They purportedly explained that current Bursa Malaysia rules prohibit the operator from taking this ratio to beyond 5% over the course of a year without first gaining the support of minority shareholders.
As such and the brokerage reportedly pronounced that Genting Malaysia Berhab will now likely wait until October to invest any more cash into Empire Resorts Incorporated, at which point up to $140 million could be required to keep the subordinate from falling into insolvency owning to a failure in refinancing.
Reportedly read a Monday statement from Aggarwal and Mohata…
“We believe Empire Resorts Incorporated will attempt to conclude the refinancing of Resorts World Catskills’ long-term borrowings in the meantime as its operating outlook improves with progress in United States vaccinations. It is imperative, in our view, that Empire Resorts Incorporated secures financing soon at attractive interest rates if it is to turn profitable, lest Genting Malaysia Berhad have to shoulder further recapitalization.”
Nomura Securities Company Limited reportedly forecast that Genting Malaysia Berhad, which is also responsible for Malaysia’s giant Resorts World Genting development, could record a record $58 million loss for the upcoming financial year mainly as a consequence of its continued investment in Empire Resorts Incorporated. This looming shortfall was purportedly one of the reasons the operator recently opted to institute a range of cost-cutting measures that encompassed a temporary 20% pay cut for all staff and senior management figures.