Crown De-Merger to be Delayed After China Arrests
Crown Resorts is delaying the demerger of their Australian and International businesses as they consider changes in the VIP gambling market following the arrests of 18 staff members in China last month.
The company originally expected the demerger to take nine months from when it was announced in June by Crown Resorts chief executive, Rowen Craigie. However; investors have now been informed that the break-up will be delayed temporarily as they weigh up the impact of these recent events.
Eighteen Crown Resorts staff were arrested over ‘gambling crimes’ in October in a move that shook the International VIP gambling market. The arrests have put a damper on Crown’s Barangaroo resort development in Sydney whose business model was relying on International VIP gamblers. In addition, Crown’s share price slumped after the news of the arrests was released, although it has largely recovered since then.
The Nasdaq-listed Melco Crown Entertainment with casinos in Macau and The Philippines; however, has seen their share price rise since the middle of October. There is now greater confidence in the casino scene in Macau since China cracked down on International casinos marketing to their citizens and, after a slump of two years, Macau gambling revenue appears to be on the rise once again.
Crown’s international assets which its plans to demerger include Melco, their investment in the Alon development in Las Vegas, their 20 percent stake in the Nobu restaurant chain, its investment in the US gaming group Caesars and its 50 percent stake in UK gaming group Aspers. It will also allow the company to go ahead with its plans to liquidate its stake in its hotel business in Australia.
Crown is believed to be assessing the value of its two businesses in light of the changing market, before it continues with the demerger plan.
March 27, 2017