Fitch Ratings has issued US casino operator Empire Resorts a final “B+” Long-Term Issuer Default Rating (IDR) after the Malaysian-controlled firm completed a recapitalization.
According to Fitch’s detailed explanation, the IDR represents a two-notch improvement on the back of an improved standalone credit profile and reflects the company’s linkage to a stronger parent in Genting Malaysia. Genting Malaysia owns 49% of Empire, with the remaining 51% held by the private family trust of Genting’s Chairman and CEO Lim Kok Thay.
Empire earlier this month completed a recapitalization that included issuing US$300 million of senior secured notes, a new US$75 million HoldCo loan and a US$150 million preferred equity investment by Genting Malaysia.
Fitch also issued Empire with a Stable outlook, reflecting the recent healthy operating performance of its New York casino, Resorts World Catskills, and regional US gaming’s broader solid recovery.
The ratings agency said it expects Empire to modestly delever through 2024 and with enough free cash flow to support small level of debt paydown at the HoldCo level.
However, the two-notch uptick in IDR is primarily due to the company’s links to Genting Malaysia, an association Fitch said it views positively.
“The two-notch uplift is also reinforced by demonstrated financial support from both Kien Huat and Genting, mainly through preferred equity investments, to ensure the prior capital structure’s debt was serviced during initial operating weakness and to recapitalize the entity at a more conservative level than previously contemplated” Fitch said.
Genting’s recent US$150 million investment into Empire was one of a number of similar investments across multiple tranches since August 2019, when Genting Malaysia acquired its 49% stake in Empire, and took its total capital injection in that time to US$520 million.
