Empire Resorts, Inc. (NASDAQ: NYNY) (the “Company”) announced
today that it has entered into an Investment Agreement with Kien
Huat Realty III Limited (“Kien Huat”) under which $55 million in
new equity capital will be invested in the Company in two tranches
in exchange for Common Stock representing just under 50% of the
voting power of the Company.
Kien Huat is an investment company beneficially owned by a Lim
family trust of which Mr. Lim Kok Thay of Malaysia and members of
his family are beneficiaries. Kien Huat affiliates maintain
substantial interests in a multinational group of companies
actively involved in gaming, leisure, hospitality, power
generation, plantations, property development, biotechnology, and
oil and gas (collectively, “Genting”). Kien Huat affiliates
separately own a substantial interest in Star Cruises Ltd.,
the largest cruise operator in Asia, and financed the startup
of the Foxwoods Resort & Casino in Connecticut and the
Seneca Niagara Casino in New York.
Genting is Asia’s largest casino operator and a leading
integrated resorts development specialist with over 20 years of
global experience in developing, operating and marketing
internationally acclaimed casinos and integrated resorts in
different parts of the world, including the Americas, Australia,
Malaysia, the Philippines and United Kingdom. Genting is the
largest casino operator in the United Kingdom through ownership of
Genting UK Plc. In 2009, Genting supported the capital raising
exercise of MGM Mirage.
In 2010, Genting will open a $4.55 billion integrated resort on
Sentosa Island in Singapore, which will include a Universal Studios
Theme Park, a Hard Rock Hotel, and gaming, leisure and hospitality
venues.
First Tranche
On August 19, 2009, the Company issued to Kien Huat 6,804,188
shares of its Common Stock, representing approximately 19.9% of the
outstanding shares of Common Stock on a pre-transaction basis, for
an aggregate consideration of $11 million (the “First Tranche”). Of
this amount, approximately $2.6 million will be used to pay
interest on the Company’s Convertible Senior Notes due July 31,
2014.
Second Tranche
Subject to and following receipt of stockholder approval, the
Company will issue to Kien Huat an additional 27,701,852 shares of
Common Stock for an additional consideration of $44 million (the
“Second Tranche”). Upon closing of the Second Tranche, Kien Huat
will own 34,506,040 shares of the Common Stock of the Company for
an aggregate equity investment of $55 million. Kien Huat’s holdings
in the Company will then represent one share less than 50% of the
voting power of the Company.
$10 Million Credit Facility
Following the Second Tranche, Kien Huat will make available to
the Company a credit facility of $10 million, the proceeds of which
are to be used for working capital and to repay in full any
remaining indebtedness under the Company’s $4.4 million senior
credit facility with The Park Avenue Bank of New York.
Senior Notes
The Company is presently in litigation with beneficial owners of
its $65 million Convertible Senior Notes due July 31, 2014, because
the Company believes that put rights to accelerate the principal of
the Senior Notes on July 31, 2009, were not properly exercised in
the manner required by the indenture for the Company to have been
otherwise obligated to retire the Senior Notes on July 31,
2009.
The Company intends to enforce its right under the indenture to
repay the principal of the Senior Notes on their original maturity
of July 31, 2014. Accordingly, proceeds of the transaction with
Kien Huat are not intended to be used by the Company to retire
principal under the Senior Notes.
Corporate Governance
Under the Investment Agreement, Kien Huat is entitled to appoint
three representatives to the Company’s Board of Directors,
including a non-executive Chairman. Upon the closing of the First
Tranche, subject to Board and regulatory approval, Mr. G. Michael
Brown and Mr. Colin Au have been designated to serve as Kien Huat’s
initial Directors, and Mr. Brown has been designated as Chairman.
Kien Huat will designate a third director upon closing of the
Second Tranche.
Messrs. Brown and Au will fill the vacancies on the Board
created by the August 12, 2009 voluntary resignations of Messrs.
Bruce Berg and Kenneth Dreifach.
Voting Agreement
Concurrently with the execution of the Investment Agreement,
holders of approximately 38% of the Company’s outstanding Common
Stock entered into a Stockholder Voting Agreement pursuant to which
such stockholders have agreed to vote all of the shares of voting
capital stock of the Company that such stockholders own in favor of
the proposals to be recommended by the Company at a Special Meeting
of Stockholders to be held to approve the transactions contemplated
by the Investment Agreement.
About G. Michael Brown
G. Michael Brown will serve as non-executive Chairman of the
Board of the Company. He is currently a partner in the law firm of
G. Michael Brown & Associates, a general practice concentrating
on casino gaming law. Mr. Brown is admitted to practice law in New
York and New Jersey. Previously, Mr. Brown served as Director of
the Division of Gaming Enforcement in the Office of the Attorney
General of the State of New Jersey, as counsel to the Board of
Inquiry into Casinos in Melbourne, Australia, and as a consultant
to the Treasurer of Queensland, Australia. He has also served as US
counsel for Genting Berhad and as counsel and consultant to
American casino interests in New Jersey, Nevada, Connecticut,
Australia, the Bahamas, Canada, Jamaica, the U.K., and other
foreign jurisdictions. Mr. Brown previously served
as President & CEO of Foxwoods Resort Casino, President
& CEO of Seneca Gaming Corp., and advisor to other tribal
casinos.
Mr. Brown attended college at the Franciscan University,
Steubenville, Ohio (1964), and received an LL.B. (1967) and J.D.
(1969) from Seton Hall University School of Law in Newark, New
Jersey. He is a Past President of the International Association of
Gaming Attorneys.
About Colin Au
Colin Au will serve as a Director of the Company and as a
Strategic Advisor regarding the development and operation of the
Monticello Casino & Raceway. Mr. Au is presently a
Director and Advisor to a number of companies in Asia, Europe and
the United States that are involved in resorts, casinos, cruises,
marine engineering and investment holding. Mr. Au has served as a
senior executive and director of a number of affiliates of Kien
Huat for the past 30 years.
Mr. Au received an MBA from the Harvard Business School in 1974
and a B.Sc. (Hons.) in Chemical Engineering from the University of
Birmingham, UK, in 1972.
About Kien Huat and Genting
Affiliates of Kien Huat have substantial interests in Genting,
which is recognized as one of Asia’s leading and best-managed
multinational corporate groups. Genting was founded in 1965 by Mr.
Lim Kok Thay’s father, Mr. Lim Goh Tong, who built Genting's first
gaming and entertainment resort, known as Genting Highlands in
Malaysia, the world’s largest single resort, which includes over
10,000 hotel rooms within a complete entertainment city. In 2008,
Guinness World Records listed the Genting Highlands First World
Hotel as the world's largest hotel.
Today, Genting has 27,000 employees and four listed
companies:
- Genting Berhad - Kuala Lumpur
Stock Exchange: 3182.KL
www.genting.com
- Genting Malaysia Berhad - Kuala
Lumpur Stock Exchange: 4715.KL
www.gentingmalaysia.com
- Genting Plantations Berhad -
Kuala Lumpur Stock Exchange: 2291.KL
www.gentingplantations.com
- Genting Singapore PLC - Stock
Exchange of Singapore: G13.SI
www.gentingsingapore.com
Affiliates of Kien Huat separately control Star Cruises Ltd.
(Hong Kong Stock Exchange: 678.HK, www.starcruises.com), the
largest cruise company in Asia, which owns a 50% interest in
Norwegian Cruise Line (www.ncl.com), the third largest cruise
operator in America.
For information regarding Kien Huat or Genting, please contact
Mr. Gerard Lim, by telephone at +603.2333.6388, or by email at
infokhr@genting.com.
About Empire Resorts
Empire Resorts owns and operates the Monticello Casino &
Raceway, a 230-acre harness racing track and casino located in
Monticello, New York, ninety miles from midtown Manhattan. The
Company also has a financial interest in the Concord Hotel &
Resort. For additional information, please visit
www.empireresorts.com, or contact Mr. Charles Degliomini, by
telephone at 845.807.0001, or by email at
cdegliomini@empireresorts.com.
Statements in this press release regarding the Company's
business that are not historical facts are "forward-looking
statements" that may involve material risks and uncertainties. The
Company wishes to caution readers not to place undue reliance on
such forward-looking statements, which statements are made pursuant
to the Private Securities Litigation Reform Act of 1994, and as
such, speak only as of the date made. For a full discussion of
risks and uncertainties, which could cause actual results to differ
from those contained in the forward-looking statements, see "Risk
Factors" in the Company's Annual Report or Form 10-K for the most
recently ended fiscal year, as well as the Form 10-Q for the most
recently ended fiscal quarter.
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