Crown slipped after China arrests
In a March 17 report to the Australian Stock Exchange, Crown Resorts and Consolidated Press Holdings disclosed that the Aussie casino magnate James Packer has sold 1 million subordinated notes to his gaming and hospitality firm for $101.58 apiece, thereby returning more than $101 million to his personal bank account.
According to the Sydney Morning Herald, Crown has issued the notes since 2012 with a face value of $100, meaning Packer likely made 1.5 percent interest, or $1.5 million, on the loan. Packer is Crown’s company director and largest shareholder, holding 48 percent of shares.
At the same time, Packer got a separate $489 million cash infusion in the form of a 30-cent dividend from Crown and a special 80-cent payment from Crown’s recent sale of its stake in Asian casino operator Melco Crown. Last August, Packer sold 4.8 percent of the company, bringing his ownership to less than 50 percent.
Crown is working to slash a debt load of $1.76 billion with a major overhaul of its business that includes a retreat from global development plans and a new emphasis on domestic operations in Melbourne, Perth and Sydney, where Crown is building a VIP resort at Barangaroo.
The company has another $422 million in subordinated notes outstanding and intends to buy back as many as possible, the Herald reported. Crown also announced plans to launch a $500 million buyback of ordinary shares.
Crown’s change in direction followed the arrest of 18 Crown staff members in China in October; 14 remain of those employees are still being held in a Shanghai detention center, accused of so-called “gambling crimes.” Two months after the arrests, Crown said it would sell its stake in its Melco Crown and canceled plans to build a new casino in Las Vegas. It also announced austerity measures including layoffs at its Perth casino and a leaner budget for marketing.
Crown’s half-year result, released last month, showed that VIP gaming revenues were down more than 47 percent in Melbourne and almost 39 percent in Perth, for a drop in profit of 9.6 percent for the period.
Meanwhile, Melco Crown, with casino resorts in Macau and the Philippines, recently announced it will rebrand itself as Melco Resorts and Entertainment. The name change is subject to shareholder and regulatory approval and is expected to go to a vote before the end of March, reported the Casino News Daily.
