Empire Resorts to issue $475m worth of senior notes
Casino operator Empire Resorts announced it will issue senior secured notes worth $475m as a means to boost liquidity. Since last year, Empire Resorts, with properties in New York, was jointly managed by Genting Malaysia, with a 49% stake, and Kien Huat Realty III Ltd with 51%. With the acquisition of Empire Resorts, it’s predicted that Genting will try to obtain a full casino license in the New York area.
The issuance of senior notes will be used to repay debts and increase debt reserves, as well as increase the group’s liquidity during the ongoing COVID-19 pandemic. But experts remain cautious about this announcement. Two rating agencies, Fitch and S&P World, gave the notes a B+ mark.
Finch stated they could increase the group’s cash reserves to about $100m, adding it’s “sufficient in the context of weak yet positive forecasted EBITDA generation in the second half of 2020 and minimal maintenance capex needs.” However, the sum might be enough to fund a license for a slots-only casino the group was planning to construct in Orange County, New York. This prediction relied on the project going forward with low expenses. “While the excess cash provides a healthy buffer during our forecasted recovery from the coronavirus, longer term, Fitch expects Empire to maintain lower cash balances more in-line with operating needs.”
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