International edition
September 24, 2021

Crown secured the capital injection from its shareholders this week

Packer's us$ 100 million to shore-up Crown

(Macau).- James Packer’s private company, Consolidated Press Holdings, has taken up a third of a us$ 300 million equity placement in casinos operator Crown, as the company strengthens its balance sheet to help weather the gambling downturn in the US, Macau and Australia.

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rown, of which Packer is executive chairman, secured the capital injection from its shareholders late on Tuesday, just days after refinancing a us$ 1.6 billion debt facility.

The extra funds could also mean Crown will be able to put cash into two ailing US casino companies in which it has minority stakes.

Harrah’s Entertainment and Station Casinos Group, in which it owns 2.5 % and 4.9 % respectively, have been busily trying to renegotiate their heavy debt loads, asking their bondholders to swap their notes for new ones that have a lower value but will be easier to redeem if they collapse.

Station said that its bond exchange had failed, and analysts fear it is in danger of breaching its banking covenants. Crown confirmed that CPH had taken up us$ 100 million of us$ 300 million issue and will maintain its 38 % stake in the company. The injection of funds has helped it to stabilize its balance sheet for an expected rocky year ahead in the gambling industry.

Fitch Ratings director Vicky Melbourne said the move was a positive one. "They are on the front foot. They don’t have any upcoming [debt] maturities, so it’s certainly not a case of them having any liquidity issues," she said.

The placement was priced at us$ 4.95 per share, a 9 % discount to the previous day’s closing price. Crown said it would use the funds to "increase funding flexibility". Investor relations manager Geoff Kleemann said the offer was "near twice" oversubscribed, but the company was not tempted to try to raise more money.

"We knew what we wanted to raise and what made sense in raising some money to shore up the balance sheet. In the current climate our board just likes to be prudent," he said.

The company could be forced to tip in more money into some of its projects. Earlier this month it said it had put in an extra us$ 24.8 million to fund nine casinos in Canada through a joint venture with Macquarie Bank.

Crown has a total of us$ 2.4 billion in net debt on its balance sheet, and a similar amount of cash, but will need to spend most of this when it completes the purchase of four US casinos by the first quarter of next year for about us$ 1.75 billion. Since the deal was signed the Australian dollar has fallen more than 30 %.

It has not been a great year for Crown shareholders. Shares have fallen 62 % in the past year compared to 43 % in the ASX 200. But shareholders in US gambling companies have fared much worse.

Crown’s Australian casinos are still the best performing of the nation’s casinos, with the Crown in Melbourne and Burswood in Perth reporting revenue growth of 4 % in the five months to the end of November, the company said. But this is half what it was a year ago. Shares in the company closed yesterday down 30c, or 5.5 %, at us$ 5.14.

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