Crown’s us$ 1.75 billion casino buyout leads to lawsuit

Crown said in December 2007 it would buy Cannery Casino Resorts LLC, co-owned by Millennium Gaming Inc. of Las Vegas and Oaktree Capital Management LLC of Los Angeles, to acquire three Nevada casinos and The Meadows Racetrack & Casino south of Pittsburgh.

“It turns out that the approval process in Pennsylvania, but not in Nevada, required licensing applications to be made by the trusts and Gretel Packer as a beneficiary,” Gretel Packer said in a lawsuit filed today in Delaware Chancery Court in Wilmington. She said she doesn’t want to release financial information.

James and Gretel Packer are heirs to an estimated us$ 5 billion fortune left by their father, Kerry Packer, who died in 2005. Sydney-based Crown, Australian biggest casino owner, owns casinos in the US, Macau, the UK and Canada and reported revenue of almost us$ 1.8 billion last fiscal year.

Gretel Packer and the family’s Consolidated Custodians International Ltd. Bahamian trust asked a judge to rule they “are not parties” to the Cannery buyout agreement, “it imposes no obligations on them” and they can withdraw from the licensing process.

The sellers have sent letters threatening legal action and suggesting “the true reason for plaintiffs’ withdrawal from the licensing process” was “collusion with Crown as a pretext for reneging on the purchase agreement,” Gretel Packer said in court papers.

Millennium Gaming officials weren’t immediately available to comment on the lawsuit. Crown fell 8 cents, or 1.7 %, to us$ 3.04 in Australian trading. The shares have fallen 20 % this year. The case is Consolidated Custodians International Ltd. v. Millennium Gaming Inc., CA4388, Delaware Chancery Court (Wilmington).