Empire Resorts, Inc. announced a definitive agreement under which affiliates of Kien Huat Realty III Limited and Genting Malaysia Berhad will acquire all of the outstanding equity of the company not currently owned by Kien Huat or its affiliates for $9.74 in cash per share of common stock, and with each share of the company's Series B preferred stock receiving the same consideration on an as-converted to common stock basis. Kien Huat is currently the holder of approximately 86 percent of Empire Resorts' outstanding shares of common stock, including common stock issuable upon conversion of the company's Series F convertible preferred stock.
The purchase price represents a premium of approximately 15 percent over the closing share price of Empire Resorts' common stock on August 16, 2019, the last trading day prior to the announcement. The Board of Directors of Empire Resorts has approved the transaction on the unanimous recommendation of the previously formed special committee of independent directors.
Empire Resorts and Kien Huat also amended Kien Huat's existing preferred stock commitment letter with the company, which, subject to the terms thereof, enhances Empire Resorts'access to capital through February 2020. The amendment increases Kien Huat's remaining commitments from $52 million to $77 million. This credit support will enable the company to continue satisfying its debt obligations, while facilitating its operating strategy.
"We are pleased to reach this agreement and provide immediate certain cash value to our stockholders," said Keith Horn, independent director of Empire Resorts and chair of the special committee. "Kien Huat has been a true partner for Empire Resorts, and we look forward to welcoming Genting Malaysia into our ongoing relationship. With Kien Huat and Genting Malaysia, we will be part of an extensive and attractive organization with enhanced scale and global reach. Importantly, Kien Huat has agreed to provide incremental credit support to Empire Resorts, which will enable the Company to meet its debt obligations as we continue to execute on our business strategy."
Ryan Eller, President and CEO of Empire Resorts, said, "With the resources and support of Kien Huat and Genting Malaysia, Empire Resorts will be better positioned financially and operationally, which will help us advance our mission of delivering a winning combination of luxury facilities, quality entertainment and exceptional customer service. This transaction is a win-win for all our stakeholders, including our stockholders, customers, employees, creditors and the communities in which we operate. Importantly, we expect our employees will benefit from new opportunities for career development as part of a larger organization. I look forward to working closely with Kien Huat and Genting Malaysia to seamlessly complete the transaction."
Under the terms of the agreement, Empire Resorts' special committee, with the assistance of its financial advisor, will conduct a 10-business day "go-shop" process following the date of the announcement of the definitive agreement, during which it will actively initiate, solicit, encourage and evaluate alternative acquisition proposals, and potentially enter into negotiations with any parties that may offer alternative acquisition proposals. This process will facilitate our efforts to maximize value for stockholders. Empire Resorts will have the right to terminate the definitive agreement to accept a superior proposal, if one is received, subject to the terms and conditions of the definitive agreement. There can be no assurance that this "go-shop" process will result in a superior proposal or that any other transaction will be approved or completed. Empire Resorts does not intend to disclose developments with respect to the solicitation process unless and until its special committee makes a determination requiring further disclosure.
The transaction is expected to close in the fourth quarter of 2019. The transaction requires "majority of the minority" stockholder approval and provides an opportunity for Empire Resorts'stockholders to exercise their appraisal rights in connection with the proposed transaction. The transaction is also subject to the satisfaction of customary closing conditions and regulatory approvals, including obtaining specified gaming authority approvals and performance of the parties' contractual obligations through closing. Kien Huat has also entered into a voting agreement under which it has committed its voting shares in support of the transaction. Upon completion of the transaction, Empire Resorts will become a privately-held company and its common stock will no longer be listed on any public market.
Moelis & Company LLC is serving as financial advisor to Empire Resorts' special committee and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as its legal advisor. Cleary Gottlieb Steen & Hamilton LLP is serving as legal advisor to Genting Malaysia.