Resorts World Catskills (RWC) in upstate New York hasn’t been able to produce the numbers lately and rumblings of a possible bankruptcy began to be heard. The casino’s largest shareholder, Genting Malaysia, suggested to the brass of the casino’s parent company that it give it control of the casino last week and it appears the executives have jumped on the idea. Empire Resorts has already agreed to let Genting purchase the casino.
RWC accepted its first gambling patrons just about a year and a half ago. With dollar signs in their eyes, Empire executives fully expected the casino to draw huge crowds in an otherwise sparse gambling market. Those dollar signs continued to fade in both size and color as the casino underperformed time and again, with RWC forced to report a loss of almost $140 million last year. Tack this onto a debt of around $533.68 million and things weren’t looking good.
Genting, and its leader, KT Lim, will pay $9.74 in cash for the remainder of the stock it doesn’t already control. Genting will own 49% of the venue, with Lim’s family trust, Kien Huat Realty, assuming 51% of the business. The final total to be laid out is $128.6 million for 13.2 million shares.
Genting USA, a subsidiary of the international casino operator, will lead the endeavor and will also provide $9.4 million for the development of a new joint venture to manage the merger. The family trust is expected to contribute 15.7 million shares that it will take in Empire Resorts once the merger is complete and will receive $9.4 million in return.
The president and CEO of Empire Resorts, Ryan Eller, welcomes the deal. He believes that Genting will leave the casino in a better position “financially and operationally” and letting go of the property frees up some of his time that he can use to concentrate on the company’s Monticello Raceway.
Provided regulators approve the transaction, Genting plans on taking the casino private. Lim asserts that this is the only way that it can unload the interest the property is carrying and get rid of its lenders. The casino currently has around $400 million in debt, with Empire stating in a filing on its second-quarter performance, “We are currently generating operating losses, as the casino revenues have not exceeded the costs related to the casino since its opening in February 2018.”