Genting Malaysia subsidiary inks merger deal to delist Empire Resorts

Empire’s board of directors unanimously recommended for the approval of the proposed merger


GENTING Malaysia Bhd’s (GenM) indirect wholly owned subsidiary Genting (USA) Ltd (GenUSA) has acquired a 49% stake in joint-venture (JV) company Hercules Topco LLC to undertake the planned delisting of US-based casino operator Empire Resorts Inc from the US stock market.

In a statement to Bursa Malaysia yesterday, GenM said Hercules Topco had entered into an agreement and plan of merger with Hercules Merger Subsidiary Inc and Empire on Aug 18 to effect a proposed merger of all outstanding shares held by shareholders of Empire unaffiliated with Kien Huat Realty III Ltd at a cash consideration of US$9.74 (RM40.68) per share.

Hercules Topco was incorporated in Delaware, US, on Aug 16 under the proposed JV between GenUSA and Kien Huat to privatise Empire.

“As part of the proposed merger and in accordance with the merger agreement, shareholders of Empire’s common stock (other than shareholders who have elected to dissent from the proposed merger and seek appraisal rights; shareholders of cancelled shares; and Kien Huat, GenUSA, Hercules Topco and their respective affiliates) will be entitled to receive in cash from Hercules Topco US$9.74 for each share in Empire held,” it said.

The gaming group said GenUSA and Kien Huat received a 49% and 51% “membership interest” respectively in Hercules Topco on Aug 18, following which Hercules Topco will hold all then-outstanding common stock of Empire post-completion of the proposed merger.

“All distributions from Hercules Topco will be allocated to GenUSA and Kien Huat on a pro rata basis in accordance with GenUSA and Kien Huat’s membership interest in Hercules Topco and all decisions of Hercules Topco will be made by the unanimous agreement between GenUSA and Kien Huat,” it said.

GenM said a special committee comprising Empire’s board of directors had resolved that the proposed merger is in the best interests of Empire’s shareholders, and unanimously recommended that the Empire board approve the proposed merger.

“The Empire board, on the recommendation of the special committee, approved and authorised the merger agreement and the proposed merger, declared that the proposed merger is in the best interests of Empire and its shareholders, directed the merger agreement be submitted for approval by Empire’s shareholders at a shareholders’ meeting, and recommended that Empire’s shareholders adopt the merger agreement,” GenM’s exchange filing yesterday noted.

Under the terms of the merger agreement, Hercules Topco and Empire will take efforts to delist Empire’s common stock from the Nasdaq Global Select Market and deregister Empire’s common stock under the US Securities Exchange Act of 1934, as amended, following the successful completion of the proposed merger.

According to GenM’s announcements earlier this month, the casino and resort operator plans to acquire a 35% stake in Empire from Kien Huat, an investment vehicle under GenM’s controlling shareholder, Tan Sri Lim Kok Thay, which currently controls about 84% of the debt-ridden casino and horse racing company based in Monticello, New York.

GenM, in a previous exchange filing, said Empire had posted an accumulated net loss of US$212.4 million since its Resorts World Catskills casino in Kiamesha Lake, New York, started operations in February 2018.

The group had also said GenUSA will purchase 13.2 million shares in Empire from Kien Huat at US$9.74 apiece.

In its exchange filing yesterday, the group said GenUSA and Kien Huat will inject their Empire shares into Hercules Topco.

“As part of the proposed merger, the qualified shareholders of Empire will receive the merger consideration from Hercules Topco. Based on the merger agreement and the membership interest in Hercules Topco, GenUSA and Kien Huat’s portions of the merger consideration to be injected into Hercules Topco are approximately US$28.5 million and US$29.7 million respectively,” it stated.

GenM’s shares closed 0.33% lower at RM3.06 yesterday, valuing the company at RM18.17 billion.