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Crown and Melco sale payment stalls

Mon, Sep 2, 3:05pm by Staff Writer

Billionaire casino owner James Packer is unlikely to receive a second $880 million windfall from the sale of a major stake in Crown Resorts before Christmas, if it goes ahead at all, with a government investigation into the sale and other probity issues at the casino expected to stretch into the New Year.

Sydney Morning Herald reports from last week reveal that the New South Wales Independent Liquor and Gaming Authority released terms of reference into its inquiry into whether Crown should keep its Barangaroo casino licence, and if Hong Kong casino group Melco Resorts should be allowed to invest in Crown.

The gambling regulator launched its inquiry following revelations by multiple media outlets that Crown went into business with junket tour operators backed by powerful Asian crime gangs and Chinese foreign influence agents.

Mr Packer agreed to sell a 20 per cent stake in Crown – almost half of his investment in the company – to Hong Kong casino tycoon Lawrence Ho’s Melco Resorts for $1.7 billion in May, with Mr Ho signalling at the time he was interested in making a full takeover for Crown.

Last week, Mr Packer and melco said they would wait for former Supreme Court judge Patricia Bergin to complete the ILGA inquiry before proceeding with the second half of the share sale.

The first $880 million tranche went through in June and the remainder was to be sold by the end of September.

ILGA has not set a time frame for the inquiry, which has powers similar to a royal commission, other than to say it will report back to the authority “as soon as reasonably practicable”.

Sources familiar with the administration of New South Wales gaming regulation anticipated the inquiry would take at least four months to complete.

Closer to six months was likely, the sources said, with the potential for it to stretch even longer if it uncovered information it found concerning and requiring deeper investigation.

Crown and Melco have said they would cooperate fully with the inquiry.

Melco and Mr Packer’s revised sale terms also say the sale will not go ahead until gambling regulators in all states Crown has casino licences – Victoria, New South Wales and Western Australia – write teo Melco confirming it s a “suitable person” to be associated with running a casino.

Sale could take a year

In May, Mr Ho said he expected state-based probity checks to take about a year.

Either Melco or Mr Packer can cancel the transaction after the May 31 “sunset” date, which can be extended.

Crown’s licence for the casino it is building at Sydney’s Barangaroo precinct bans it from dealing with companies and individuals associated with Melco boss Mr Ho’s father, Stanley Ho, because of his alleged links to organised crime.

The ILGA inquiry will examine if this condition was breached when Mr Packer agreed to sell his shares to Melco.

The market is digesting the potential outcome of the inquiry, with Macquarie analyst David Fabris saying a full takeover of Crown by Melco was still possible, but that “there is greater uncertainty given recent events.”

Macquarie has removed a “takeover premium” it had factored into its share price rating.

Company watchers said there was no obvious buyer that could pick up all of Melco’s Crown shares if it decided, or was forced, to sell them.

That means Melco would have to offload them in smaller parcels to multiple institutional investors, making it harder to command any premium to the market price.

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