Crown and Melco deal stalls

by Charlotte Lee Last Updated
Crown to ban junkets as it bids to retain casino license

James Packer’s Crown share sale to Melco Resorts has been halted by the coronavirus casino shutdown.

The ABC reports that the coronavirus epidemic threatens to derail James Packer’s controversial deal to sell almost 20 per cent of his Crown Resorts casino empire to Hong Kong gaming tycoon Lawrence Ho.

Mr Ho’s Melco Resorts said the company had dumped plans to proceed with the full $1.75 billion purchase from Mr Packer by walking away from buying the second $880 million bundle of shares.

In a statement released last week, Melco cited “the impact of the coronavirus epidemic, including a severe drop in tourism…and the recent division of the Government of the Macau special administrative region to close all casinos in Macau.”

Coronavirus has disrupted businesses around the world amid fears that damage to China’s economy could create an economic shock and derail the global economy.

Already, the Chinese Government’s two-month ban on group tours, combined with the later Australian Government ban on non-resident Chinese arrivals, has seen Crown’s share price lose more than a dollar over the past three weeks to finish yesterday’s session at $11.61.

Analysts at investment bank UBS last week identified Australia’s major casino operators, Crown and Star, as two of the biggest potential losers as the efforts to contain coronavirus drag on.

“We estimate VIP volumes could be down 50 per cent with some loss of play from both international and domestic main floor,” UBS forecasted.

“We believe this could drag financial year 2020 earnings per share by circa 10 per cent and FY21 earnings per share by circa 20 per cent.”

NSW regulator inquiry gets under way

Melco’s decision to “reassess all non-core investments to be made in 2020” also comes as a high-stakes inquiry by the New South Wales gaming regulator prepares to scrutinise whether the proposed deal breaches a condition of Crown’s licence to operate a VIP casino at Barangaroo in Sydney.

The inquiry by the New South Wales Independent Liquor and Gaming Authority is probing Melco’s agreement in May 2019 to buy 19.99 per cent of Crown Resorts for $1.76 billion in two tranches of just under 10 per cent.

The Barangaroo licence specifically outlaws any links to Lawrence Ho’s 98-year-old father Stanley Ho, who in the past has been linked to allegations of organised crime in Hong Kong and Macau.

Crown Resorts has engaged Rowena Orr QC to lead its legal team at the inquiry, which gets underway on February 24 in Sydney.

Ms Orr is best known as senior counsel assisting commission Kenneth Hayne in the financial services royal commission.

Crown Sydney to open on Christmas Day

Crown’s latest venture in Sydney is one of the most anticipated projects in the harbour city, as it is expected to give a new look to the Barangaroo waterfront.

The massive addition will include a hotel, apartments, restaurants and a VIP-centric casino that are slated to open on Christmas Day this year.

Casino Aus reports that construction on the project began in 2016, though sometimes stalled periodically due to legal battles and other red tape.

The estimated completion date has shifted numerous times, with James Packer saying the venture will open on December 25.

Last month, the billionaire investor and Crown Resorts’ largest shareholder Mr Packer emerged from a mostly self-imposed exile from public life to tour the Crown Sydney development site.

He seemed pleased with the progress of the $2.4 billion project at Barangaroo.

In fact, he was so pleased that he announced to the media it would open to the public on Christmas Day.

When the project first began, the opening date was expected to be early 2020 for the first tower and the end of 2020 for the rest of it.

Along the way, the opening was delayed, with 2021 slated as the opening date.

Packer was particular though, naming Christmas Day of this year in his first public appearance in more than a year.

“It’s really pleasing,” Packer said tot he media, referring to the opening begin three months earlier than planned.

“We are truly indebted to our builders, architects and tradies who have made this possible.”

Back to top