Empire Resorts, parent company of Resorts World Catskills casino, recorded a second-quarter 2019 loss of $35.96 million on revenue of $60.07 million and operating expenses of $79.94 million, according to a Friday financial filing.
The company, which owns the Town of Thompson casino and the Monticello Raceway horse track, cautioned that it’s considering a voluntary, prepackaged Chapter 11 bankruptcy, according to a Friday Securities and Exchange Commission filing.
The warning follows six of months of 2019 losses totaling $73.5 million. From the casino’s Feb. 8, 2018 opening through the end of last June, Empire Resorts has reported $211.5 million in losses, an average of roughly $12.4 million per month.
The losses are due to gross gaming revenues that lagged 45 percent below company projections in year-one alone, in a Northeast market over-saturated with gambling options.
If the company seeks a prepackaged bankruptcy, it would be to smooth and accelerate a Chapter 11 filing. Empire and its creditors would try to agree on a financial reorganization plan before the company submitted it for court approval.
If the company can’t restructure its debt and other obligations, “we may not have enough cash and working capital to fund the operations,” the company warned. “As a result, we may be required to seek to implement an in-court proceeding under Chapter 11 of the United States Bankruptcy Code” to cover expenses for the casino, its hotels and future golf course.
On July 25, Malaysian-Chinese casino magnate K.T. Lim, whose family trust Kien Huat Realty owns 86 percent of Empire, said he wants to buy the company’s outstanding shares to save it.
Such an acquisition by Kien Huat would make bankruptcy, and any accompanying debt reduction, easier because Empire’s debt holders would be negotiating with just a Lim-controlled business entity.
Via Kien Huat, Lim’s family is the largest shareholder in Genting Malaysia, a giant, publicly traded, transnational casino and entertainment company. Lim also serves as Genting Malaysia’s chairman and CEO.
Genting Malaysia agreed on Monday to spend $128.6 million to buy 46 percent of the Lim family’s Empire stake or 35 percent of Empire’s voting power on a fully diluted basis after the conversion of all preferred stock into common stock.