James Packer to Restructure His Crown Resorts
James Packer’s Crown Resorts has announced a major restructuring that will split its high performing domestic business from its underperforming International business in an effort to maximise shareholder value and create a more efficient structure in the ownership of the company’s assets.
The domestic business will combine its Melbourne and Perth casinos, its planned Barangaroo luxury resort development in Sydney, its online gambling operations and its Crown Aspinalls Casino in London.
It’s International business will be taken over by a new entity and will include its interests in Macau, particularly Melco Crown Entertainment and its assets in the Philippines, as well as the Alon development in Las Vegas and its stake in the Nobu restaurant chain.
“The board has for some time been looking to address what we believe to be a material undervaluation of the market of Crown Resorts’ assets, due to a traditional consolidated (or amalgamated) structure,” announced Robert Rankin, chairman of Crown Resorts.
“In particular, we believe that Crown Resorts’ extremely high quality Australian resorts are not being fully valued and the Crown Resorts’ share price has been highly correlated to the performance of its investments in Macau.”
In addition, a hotel property trust will be set up and will include the company’s three hotels in Burswood, but not its Crown Towers Melbourne.
“An IPO of a property trust which owns most of Crown Resorts’ Australian hotels would provide an opportunity to realise significant value for our shareholders whilst maintaining a majority interest in key assets within our Australian business,” said Rankin.
Gambling revenue in Macau has dropped for two years straight and in May, Crown offloaded a portion of its stake in Melco Crown Entertainment for US$800 million.
Shares in Crown Resorts jumped 13 percent to $12.78 on the morning following the restructuring announcement.
March 27, 2017