Maybank has expressed concerns over Genting Malaysia’s latest acquisition move, stating, ‘We do not view this proposal positively but hope that this will be the last value destroying related party transaction (RPT).’
The bank made the comment in a report following Genting Malaysia’s announcement that it will acquire the remaining 10 percent economic interest in Empire Resorts that it does not already own.
According to the company’s Bursa Malaysia filing, Genting Malaysia will purchase the remaining stake from the family trust of its Chairman and CEO, Lim Kok Thay, for $41 million. The deal also includes the assumption of an intercompany loan of $39.7 million owed by Empire to Kien Huat Realty III Limited (KH), a vehicle controlled by the Lim family. The transaction is expected to close by the end of the second quarter of 2025 and does not require shareholder approval.
KH currently holds 51 percent of Empire Resorts’ common stock, with Genting Malaysia holding the remaining 49 percent. However, due to Genting Malaysia’s ownership of Empire’s convertible preferred stock, it has already been accounting for 90 percent of Empire’s losses. With this deal, Genting Malaysia will assume full ownership of Empire and begin consolidating its financials rather than equity-accounting them.
Maybank estimates that the increased exposure to Empire’s losses will reduce Genting Malaysia’s core net profit by 2 percent to 4 percent across FY2025 to FY2027. The acquisition will also see Genting Malaysia consolidate Empire’s $300 million in senior secured notes, raising its net gearing estimate for end-FY2025 to 98 percent, from a previously forecasted 79 percent.
‘To own 100 percent of loss generating Empire Resorts, Genting Malaysia has proposed to acquire the remaining 51 percent of Empire common stock from Kien Huat Realty III (KH) for $41 million (MYR177 million),’ Maybank noted. ‘We continue to impute no value to Empire and consolidate Empire’s $300 million (MYR1.3 billion) Senior Secured Notes.’
Maybank’s sum-of-the-parts target price for Genting Malaysia has been revised downward to MYR2.08 ($0.49) from MYR2.41 ($0.57) to reflect higher debt and capital expenditure assumptions.
Despite the negative view on the transaction, the bank has upgraded Genting Malaysia to “BUY” from “HOLD,” citing potential catalysts such as a resolution to the $600 million Resorts World Bimini lawsuit and the possibility of Resorts World New York securing a full casino license by year-end.
Empire Resorts owns and operates several gaming assets in New York State, including Resorts World Catskills, Resorts World Hudson Valley, and mobile sports betting platform Resorts World Bet.
