Australian Crown defers deal for US casinos

While neither party’s announcement elaborated on the reasons for the termination, news reports from Australia indicate that the sister of James Packer, who controls Crown, was reluctant to submit to regulatory licensing requirements in Pennsylvania. The Packers need to be licensed in Pennsylvania, where Cannery owns a racetrack casino, to consummate a deal.Crown received final approval from Nevada regulators in January.

The company has a minimum of 60 days – or 90 days, if Cannery agrees to extend the deadline – to clear regulatory hurdles as a preferred stockholder. If approvals aren’t obtained by that time, Crown will not be issued Series B shares and will pay an additional us$ 200 million fee to Cannery. Also, Crown would invest us$ 40 million into Cannery for a 4.1 % non-voting stake.

The investment puts Cannery "in an enviable position in the gaming industry" with a "strong balance sheet" and "ample liquidity" to weather the economic downturn, Cannery’s co-Chief Executive, Bill Paulos, said in a statement. Owners Paulos and co-chief Bill Wortman will remain at the company’s helm, with investment firm Oaktree Capital continuing to own 42 %.

Crown has a 19.6 % stake in the Fontainebleau resort under construction on the north end of the Las Vegas Strip. The company, which operates resorts in Australia, Britain, Canada and Macau, expects to open a second casino in Macau with partner Melco International by mid-year.

Packer is the son of legendary casino high-roller Kerry Packer. When he died in December 2005, Kerry Packer was Australia’s richest man.