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PETALING JAYA: Genting Malaysia Bhd (GenM) has confirmed it is being sued by a minority shareholder of Empire Resorts Ltd for pushing ahead with a proposed merger which went against minority shareholders’ interests.
In a Bursa Malaysia filing late last night, GenM responded to a query from Bursa Malaysia, saying a putative class action complaint had been filed with the New York State Supreme Court in Sullivan County on Oct 8, 2019 by David Mullen.
“The merger litigation alleges that the members of the board breached their fiduciary duties in connection with the negotiation and approval of the merger agreement, as well as in authorising the disclosures made in the preliminary proxy statement filed with the SEC on Sept 24, 2019.
“The merger litigation further alleges that each of the company, parent, merger sub, Kien Huat, and GenM aided and abetted the board’s alleged breaches of fiduciary duty. The plaintiff seeks to enjoin the merger, or, if the merger is consummated, rescind the merger or recover damages, as well as an award of the plaintiff’s attorneys fees and costs of the litigation,” the group said in its exchange filing.
GenM also denied all such allegations, saying they believed the merger litigation is without merit, and planned to defend against all claims stated therein.
In a report by a local daily on Wednesday, which quoted The Times Herald-Record website, Mullen’s suit named Empire Resorts, its board members and the company’s controlling shareholders - GenM and Kien Huat Realty III.
Kien Huat Realty, an investment vehicle controlled by Tan Sri Lim Kok Thay, and GenM are the majority shareholders who collectively control 86% in Empire Resorts, via a joint-venture company, Hercules Topco LLC.
Mullen accused Empire Resorts and its board of not providing sufficient information in order to assess the privatisation offer. Furthermore, he claimed the deal was endorsed by board members who would financially benefit from it.
Mullen also claimed Empire Resorts was deemed undervalued based on the privatisation offer of US$9.74 per share.
To recap, GenM bought an effective 35% stake in cash-strapped Empire Resorts Inc from Lim in a related party transaction for RM538 million in cash. Following the share acquisition, Gen M and Kien Huat decided to jointly take on the privatisation of Empire Resorts for US$9.74 per share.
