Empire Resorts Announces Settlement with Noteholders
25 September 2010 - 6:50AM
Business Wire
Empire Resorts, Inc., (NASDAQ: NYNY) today announced that it has
entered into a settlement agreement with the holders of over 93% of
the outstanding principal amount of the Company’s 5½% Senior
Convertible Notes Due 2014 (the “Notes”) and the Trustee under the
indenture governing the Notes, pursuant to which the parties have
agreed to settle the proceeding commenced by the Company in August
2009 in the Supreme Court of New York, Sullivan County relating to
the exercise of the put right contained in the indenture governing
the Notes.
Empire Resort Chairman of the Board Emanuel R. Pearlman
commented, “The Board has worked diligently over the past months to
forge the best possible outcome for our company and its various
stakeholders. We are pleased to have reached this agreement with
our Noteholders which resolves pending litigation and significantly
deleverages the company.”
Under the terms of the settlement agreement, the Company has
agreed to repay $22.5 million in aggregate principal amount of
Notes and offer to exchange up to 100% of the aggregate principal
amount of the Notes that remain outstanding after giving effect to
the such repayments for $32.5 million in aggregate principal amount
of 12% Senior Convertible Notes due 2014 (the “Restated Notes”) to
be issued by the Company and a pro rata share of one million shares
of the Company’s common stock. The Company also has the option to
seek alternative financing to repurchase all Notes on or before
November 22, 2010 for an amount equal to the sum of all outstanding
principal and interest (together with default interest from August
3, 2009) owed on the Notes plus $975,000. The Company will redeem
any Notes held by a beneficial owner that does not accept the
Company’s offer, if made, to exchange the remaining Notes for the
Restated Notes and common stock, subject to the terms of the
settlement agreement. In addition to the foregoing, the Company
repaid an aggregate of $10 million of principal amount of the Notes
in July and August 2010 in connection with settlement discussions
with the Trustee and the holders of the Notes. Upon the closing of
the settlement agreement, the parties to the pending litigation
will release all claims known, unknown or suspected that each may
have against the other at such time and execute and file a
Stipulation of Discontinuance providing for the dismissal of the
pending litigation with prejudice and without costs to any
party.
The Restated Notes, if issued, will bear interest on the
principal amount thereof at the rate of 12% per annum, 8% of which
will be payable in cash and 4% of which will be payable in cash or,
at the Company’s option (subject to certain conditions), in
additional Restated Notes. The Restated Notes will be convertible,
at the option of the holder, into shares of Common Stock based upon
a conversion rate of 1,132 shares per $1,000 in principal amount
(which represents a conversion price of approximately $0.8837 per
share), subject to certain anti-dilution adjustment from time to
time. The Restated Indenture governing the Restated Notes will set
forth other important terms of the Restated Notes, including,
without limitation, provisions relating to the holders’ put option,
mandatory and option redemptions, interest make-whole provisions,
and restrictive covenants.
The closing of the settlement agreement is subject to, among
other things, the approval by the Company’s stockholders of the
transactions contemplated by the settlement agreement and of a
corresponding increase in the Company’s authorized capital stock
and upon the acceptance of the company’s exchange offer by holders
of at least 90% of the then outstanding aggregate principal amount
of Notes.
Empire Resorts CEO Joseph D’Amato concluded, “This settlement is
an important milestone for Empire Resorts. We are pleased to have
crafted an agreement that resolves the uncertainty of litigation
and also provides us with the flexibility to seek alternative
financing arrangements to satisfy our obligations under the Notes
until November 22, 2010. We are optimistic that resolving the
pending litigation as provided under the settlement agreement will
allow Empire Resorts to focus on our ongoing efforts to enhance
shareholder value.”
About Empire Resorts
Empire Resorts owns and operates the Monticello Casino &
Raceway, a harness racing track and casino located in Monticello,
New York, and 90 miles from midtown Manhattan. For additional
information, please visit www.empireresorts.com.
Cautionary Statement Regarding Forward Looking
Information
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 on Form 10-K for the most
recently ended fiscal year, as amended, as well as the Company’s
Quarterly Report on Form 10-Q for the most recently ended fiscal
quarter.
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