Empire Resorts obtains bridge loan to fund 5.5% convertibles payment

By Jennifer Chiou

New York, Nov. 5 - Empire Resorts, Inc. announced that it obtained a $35 million short-term bridge loan, which it will use to finance the full repayment of its 5.5% senior convertible notes due 2014.

The company received the financing commitment from Kien Huat Realty III Ltd., the company's largest stockholder.

Empire Resorts said it will also use available funds to fund the repayment. Any remaining proceeds from the financing will be used for working capital.

In September, the company said that it had reached a settlement agreement with holders about the July 31, 2009 put option that the company failed to honor.

Following the extension of the bridge loan and the repayment of the notes, the company said it intends to conduct a rights offering to distribute to all shareholders a non-transferrable right to purchase additional shares at $0.8837 per share.

According to a news release, Kien Huat has also committed to exercise all of its basic rights to purchase additional shares.

If, upon completion of the rights offering, the proceeds are insufficient to repay in full all amounts outstanding on the bridge loan, Kien Huat has agreed to convert the full remaining amount into a 5% convertible term loan with a term of two years and a $0.8837 per share exercise price.

As previously reported, the company warned in May 2009 that it did not have the cash to repurchase the convertibles if they were put. In August 2009, Empire Resorts said that it did not receive election forms from the indenture trustee for the put option and, therefore, had no obligation to repurchase the notes.

In April, the Supreme Court of the State of New York in Sullivan County declared the company to be in default and ordered it to repurchase the put convertibles. The company appealed the decision.

Under the terms of the settlement, the company was to repay $22.5 million principal amount of the 5.5% convertibles and offer to exchange any remaining 5.5% convertibles for $32.5 million of 12% senior convertible notes due 2014 and a pro rata share of 1 million shares of common stock.

As reported, the company also has the option to seek financing to repurchase all of the 5.5% convertibles on or before Nov. 22 at par plus regular interest, default interest from Aug. 3, 2009 and $975,000, which would be split on a pro rata basis among the noteholders.

Empire Resorts is a Monticello, N.Y.-based operator of the Monticello Casino & Raceway.

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