Crown Resorts to Sell Off Macau Stake
Major Australian gaming company, Crown Resorts has announced its plans to sell off a major stake in its Macau casino business and cancel plans for its Alon project in Las Vegas as it turns its focus back on its local Australian businesses.
A major crackdown on gambling and corruption in China, resulting, in October, in the arrest of eighteen Crown employees, including three Australians, who were held in Shanghai for violating gambling regulations, has thrown Crown’s profits and expansion plans into chaos.
“There’s no doubt that those arrests changed everyone’s outlook for the sector,” stated Angus Gluskie, portfolio manager at White Funds Management, which holds shares in Crown. “It’s not as easy as it previously looked.”
According to Crown, turnover from their VIP program at Australian resorts was 45 percent lower for the first half of the 2017 financial year than the previous year and total revenue in the same period had fallen by around 12 percent.
The company has announced that it will sell off almost half of its shares in the underperforming Melco Crown Entertainment to raise $1.6 billion. The proceeds will allow them to cut debt, pay a $500 million special dividend and make a share buy-back of around $300 million possible.
“The transaction will enable investors and analysts to more easily evaluate the financial and operating performance of the company’s high quality core Australian assets,” read a statement from Crown Resorts Chairman Robert Rankin to the stock exchange.
Crown will also no longer pursue plans to build the Alon casino project in Las Vegas and may sell it. The company has not elaborated on its scrapped Las Vegas plans, but this was their third attempt to break into the famous casino city.
March 27, 2017