Pressure on in Macau
Last week James Packer upped his investment in his own company, increasing his share in the ownerships of Crown Resorts Ltd. by 3 percentage points.
According to GGRAsia, Packer’s ownership of ordinary shares increased by almost 21.9 million units to more than 386 million shares. The move also increased his voting majority from 50 percent to 53 percent.
Packer resigned his role as chairman of the firm last summer, and is now an executive director. His company has faced some headwinds in the past year as earnings from Macau have contracted. Crown Resorts is part of Melco Crown, a joint venture with Hong Kong-listed Melco International Development Ltd., which just opened its $3.2 billion Studio City resort on the Cotai Strip during a 17-month recession that shows no signs of letting up. Packer’s partner in Melco Crown, Lawrence Ho, recently joked to the Wall Street Journal that the company “picked the worst year in gaming to open.” The partners agree, however, that prospects are good for the new resort, despite a Chinese government crackdown on corruption that’s put a dent in the VIP market.
On November 5 Melco Crown Entertainment Ltd. reported revenue of US$945.7 million for the three months leading up to September 30, down 16 percent year-on-year. As of August, Crown Resorts owned a 34.3-percent stake in Melco Crown.
Moody’s Investor Service has said Packer’s firm is already overextended, and said its recent acquisition of a stake in Nobu Hospitality a “credit negative” for Crown. On October 29, Crown Resorts announced it would pay US$100 million to buy a 20 percent stake in Nobu, founded by Japanese celebrity chef Nobu Matsuhisa.
The investment “represents a new financial commitment at a time that Crown Resorts has an extensive pipeline of projects to be undertaken over the next four years,” including new resorts in Australia and Las Vegas, warned Maurice O’Connell of Moody’s.
