Crown Resorts reported that it will cancel its investments in the two biggest gaming hubs: Las Vegas and Macau.
Australia.- Crown Resorts would leave the Macau market by reducing its stake in Macau-focused Melco Crown Entertainment. Furthermore, the Australian casino operator would cancel its plans to install a new gaming complex in Las Vegas Strip, as reported on Thursday. The company is facing a rough time with the arrest of 18 of its employees in China, as well as with the government’s crackdown on casino VIP operations.
Regarding the Las Vegas project, Theo Mass, a partner at Arnhem Investment Management which holds Crown shares, told Reuters: “I don’t think there was really anyone out there who was enthusiastic about them going back in to Vegas and so pulling out is the smart thing to do. The market is not convinced Crown would make a difference there.”
As the company revealed last night, the Crown Resorts’ financial restructuring would increase the size of a share buyback and distribution to investors by US$220 million. The plan is to reduce Melco Crown’s stake to 11.2 percent (as well as the previous announced of 13.4 percent), with 5.5 percent held through a cash-settled equity swap. The company would receive proceeds of US$1.4 billion from the share sales.
“There’s no doubt that those arrests changed everyone’s outlook for the sector. It’s not as easy as it previously looked,” added Angus Gluskie, a portfolio manager at White Funds Management, which also holds Crown shares. The proceeds would be used to cut debt and pay a special dividend of US$369 million, more than half of which would go to Australian billionaire James Packer, owner of the company.