Genting Malaysia-linked US casino operator Empire Resorts has announced plans to issue senior secured notes totalling US$475 million in order to fund its debt service and boost liquidity.
Empire, which owns and operates New York’s Resorts World Catskills and harness horseracing facility Monticello Raceway, was jointly acquired by Genting Malaysia and Kien Huat Realty III Ltd, the family trust of Genting Chairman Lim Kok Thay, via a series of dealings in 2019.
The company is now owned by an entity in which Kien Huat holds a 51% stake and Genting Malaysia subsidiary Genting (USA) Ltd the remaining 49%.
According to Empire Resorts, the issuance of senior notes will be used for a range of purposes, including the repayment of present bridge loans, funding of its debt service reserve account and increasing liquidity in the midst of the COVID-19 pandemic.
The senior notes have been greeted with some caution by ratings agencies, with both Fitch and S&P World issuing a B+ rating.
According to Fitch, Empire will have around US$100 million in cash reserves following the note issuance, which is “sufficient in the context of weak, yet positive, forecasted EBITDA generation in the second half of 2020 and minimal maintenance capex needs.”
Fitch also believes the notes issuance could be sufficient to allow Empire to fully fund a second slots-only casino license planned for nearby Orange County, New York.
“Assuming the OC project goes forward and development costs are on the lower side, Empire could have sufficient cash balances to fund the project without additional capital,” it said.
“While the excess cash provides a healthy buffer during our forecasted recovery from the coronavirus, longer term, Fitch expects Empire to maintain lower cash balances more in-line with operating needs.”
Fitch noted that Genting is likely to push for a full casino license “in or closer to New York City as well as possibly other major gateway jurisdictions,” following its acquisition of Empire.
