Crown Resorts expects to post full-year net debt of US$676m

Crown Resorts' venues were closed multiple times due to Covid-19 outbreaks.
Crown Resorts' venues were closed multiple times due to Covid-19 outbreaks.

Crown Resorts expects to report a net annual debt of AU$900m when it publishes its financial results on August 30.

Australia.- Crown Resorts has reported that it expects to record a net debt of AU$900m (US$676m) for the year ended June 30 2021.

In a trading and earnings update, the company said its 2021 financial year was significantly impacted by the Covid-19 pandemic, with Crown’s properties closed for several periods and imposing capacity limits and physical distancing protocols.

Crown Resorts expects to report EBITDA after closure costs of between AU$90-100m and warned that it continues to operate in an uncertain environment with several factors expected to impact financial performance throughout the 2022 financial year.

The company believes performance will continue to be negatively impacted by Covid-19 related closures and operating restrictions as well as travel restrictions, including ongoing international border closures.

Crown Resorts is also the subject of regulatory questions with Royal Commissions ongoing in Victoria and Western Australia. The outcome of those processes may potentially impact Crown’s financial performance.

Due to this situation, Crown expects to incur increased corporate costs throughout the 2022 financial year, including legal, consulting and associated costs.

Crown Resorts said it will increase its capability across key areas in the next year, including the addition of approximately 70 new positions in the areas of financial crime and compliance and responsible gaming. 

Star Entertainment and Crown Resorts’ potential merger

In June, Crown Resorts CEO Steve McCann met with The Star Entertainment CEO Matt Bekier to talk about the potential merger of the two casino operators.

Although no details of the virtual meeting have been released, it’s believed McCann may have asked Star to provide more details about its non-bidding offer.

Star Entertainment previously said the fusion would deliver between AU$150m to AU$200m of cost synergies per annum with an estimated net value of AU$2bn.

It’s also been suggested that The Star Entertainment could help Crown Resorts solve its regulatory problems faster than Blackstone or Oaktree thanks to its experience as a casino operator in Australia.

The Australian Competition and Consumer Commission (ACCC) chairman, Rod Sims announced that a public review will be carried out to decide whether Star Entertainment would be allowed to make the acquisition.

If Crown Resorts finally accepts the offer, Crown shareholders could retain 59 per cent of the shares while Star shareholders could own 41 per cent of the newly-merged entity.

There’s been speculation that a merger could prompt a new independent casino authority in NSW, which would likely ban junkets and demand enhanced requirements for suitability.

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