Packer sells down Crown Resorts stake

Packer sells down Crown Resorts stake

Tuesday, August 30, 2016
A$448m share sale sees Packer lose majority control

James Packer has sold down his stake in Crown Resorts, reducing the stake held by his privately-held investment vehicle Consolidated Press Holdings to less than 50%.

The offloading of 35 million shares at a price of A$12.80 a share netted Packer A$448m. It leaves CPH owning 48.2% of the company. The shares were sold to third-party investors on Monday.

Announcing the move, CPH said the sale was a part of its “financing and capital management strategy”.

The statement to the Australian stock exchange added: “CPH remains deeply committed to Crown Resorts and is excited about the future of the company. CPH remains supportive of Crown’s recent announced initiatives to increase shareholder value, being the new dividend policy, proposed demerger and the continued evaluation of a potential REIT (Real Estate Investment Trust).”

According to a report in the Australian financial press, the cash raised from the sale will go towards paying off Packer’s sister Gretel Packer following a A$1.25bn settlement last year which splits up the family fortune between the siblings.

The share sale comes after Crown Resorts netted over US$800m in May from the sale of a large chunk of its stake in Melco Crown Entertainment (MCE), the Macau joint venture. Crown cut its stake from 34% to 27%, selling its share back to MCE, saying the cash would be utilised by the company to pay off its debts. As of the full-year results published in August, Crown Resorts had net debt of A$1.96bn, down from A$2.95bn as of December 2015.

With regard to the prospects in Macau, Crown Resorts said at the time of its results that though results recently have been disappointing, it expected that revenues trends “will improve as Macau further evolves into a multi-faceted, mass-market focused destination”.

The company also said in August that plans were ongoing to demerge certain international operations. These include the Crown Aspinals casino in London and a 50% stake in the Aspers chain of four casinos. Strong operating results at that business has seen the company reverse its previous balance sheet impairment of £19.8m taken back in 2009 when the investment was valued at zero.

Crown is also progressing with its Alon Casino project on the Las Vegas Strip, where it is the majority shareholder. The company said in August that design work on the casino resort was continuing.

The REIT plans would involve an IPO of a 49% interest in a new listed property trust which would own some of Crown Resorts’ Australian properties.

Among its diverse portfolio of online businesses, Crown owns a 62% stake in CrownBet, the Australian corporate bookmaker, and 100% of Betfair Australasia. It also owns a 70% stake in a social casino developer in Austin, Texas, called DGN Games and is involved in an Australian-facing fantasy sports offering with Fox Sports called DraftStars, the official DFS partner with the Australian Football League (AFL).

Totally Gaming says: A rationalisation is clearly underway with Crown Resorts, and whether it is driven by family-related settlements or not, it is a process which appears to make sense. The move towards a REIT has been undertaken by other casino businesses, including MGM Resorts International which formed MGM Growth Partners in April this year. The demerger of the international operations is well timed when the write-back of cash with regard to its UK is taken into account. A bigger question might be the company’s long-term commitment to Macau after it sold down its stake, regardless of its comments from the recent results regarding improvements in the market.

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