Melco sells Crown shares to US-based group

by William Brown Last Updated
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Casino investor Melco Resorts and Entertainment has sold its 9.99 per cent stake in Australian gaming operator Crown Resorts to an entity “owned or managed” by US-based asset management firm The Blackstone Group.

GGR Asia reports the sale was at a 37.3 per cent discount compared to the price Melco paid in May last year.

In a Wednesday filing to the Australian Securities Exchange, Crown Resorts said it had been informed that an entity linked to The Blackstone Group had acquired 67,675,000 Crown Resorts shares from Melco Resorts – representing its entire stake.

The shares were sold at a price of A$8.15 per share.

The sale amounted to more than half a billion dollars in aggregate.

In May last year, Melco Resorts said it was paying A$13 per Crown share to CPH Crown Holdings.

The latter company, controlled by Australian businessman James Packer, was a major shareholder in Crown Resorts.

The acquisition price per share represented an aggregate investment of nearly A$879.8 million for the 9.99 per cent stake in Crown Resorts.

The management of Melco Resorts had already flagged earlier this year the sale of the Crown Resorts stake was a “potential source of liquidity” in case Melco Resorts had additional “capital needs”.

When it first announced the deal, Melco Resorts was to acquire a 19.9 per cent stake in Crown Resorts, in a deal valued at A$1.76 billion.

In February, Melco said it had decided not to pursue the purchase of a second tranche of shares in the Australian company because of the “impact of the coronavirus pandemic”.

The latest announcement comes amid an inquiry into Crown Resorts’ suitability to hold a gaming licence in New South Wales.

The company is currently developing a casino complex at Barangaroo in Sydney.

The New South Wales gaming regulator had launched a public inquiry into the Melco Resorts deal, as well as to probe whether Crown Resorts breached the terms of its gaming licence for its Barangaroo project.

The inquiry has been temporarily halted due to the coronavirus pandemic.

Melco thinks twice about Crown deal

In June last year, Crown Resorts was still reeling from the crushed deal that would have seen Wynn Resorts acquire the company.

Casino Aus reported in February that Melco Resorts and its chief executive officer, Lawrence Ho, came forward with an offer to buy a 20 per cent stake in Crown from James Packer.

That offer was welcomed until this month, when the deal disappeared.

Melco rescinded the offer and blamed the recent coronavirus outbreak.

Melco made its offer to expand its business into Australia with a strong foothold.

It was willing to pay $1.76 billion for a 20 per cent stake in Crown Resorts, with the possibility of buying more over time.

James Packer, who had been wanting to offload some of his share in the company in a nod toward semi-retirement, was all in.

He snap-called the deal.

The initial part of the transaction closed on June 6, 2019.

The companies hoped the deal would be finalised by the end of September, pending a regulatory investigation by New South Wales’ government.

Mr Ho went about applying for gaming licences in New South Wales, Victoria and Western Australia, with an eye towards Melco’s expansion.

It all seemed like a positive long-term deal for both companies, with the exception of the scrutiny the deal would soon come under.

Little more than two months after the companies announced their hopeful partnership, Crown came under fire via a media investigation by three prominent Australian media outlets.

The allegations were wide-ranging in that Crown reportedly participated in or knowingly allowed money laundering, sex trafficking and other criminal behaviour at its casinos.

Ultimately, the investigation tied Crown to a powerful criminal syndicate in China.

Members of that criminal organisation would travel to Crown casinos in Australia via fast-tracked visas, and junkets delivered them to the steps of Crown properties.

All the while, Crown allegedly looked the other way.

And then there was Ho, son of famed and alleged member of a Chinese crime syndicate Stanley Ho.

While Ho avoided any criminal prosecutions throughout his life, Australian businesses notoriously stayed away from doing business with him because of his reputation.

Therefore, his son’s desire to enter Australian territories in casino business did more than raise a few eyebrows.

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