Packer Engages Moelis to Look After Crown Resorts Interests

Crown Resorts

Moelis Australia has been engaged by James Packer’s Consolidated Press Holdings to look after its interests in Crown Resorts.

The Australian Financial Review reports that it is understood CPH has mandated Moelis to independently assess what to do with the group’s Crown Resorts shareholding, in light of an $11.85 a share indicative offer from Blackstone, a private equity group that already holds a 10 per cent stake in Crown.

Packer’s CPH is Crown Resorts’ biggest shareholder, with a 37 per cent stake, worth $2.95 billion at $11.85 a share.

It’s a plum gig for Moelis, which was last spotted at Crown Resorts when its American parent worked for suitor Wynn Resorts on a takeover bid in 2019.

The gig ensures Moelis will have front row seats to the unfolding Crown situation.

Morgan Stanley and Clayton Utz are in Blackstone’s corner, while UBS and Allen’s work for Crown.

CPH’s options include dealing directly with Blackstone to try to cut a deal, using its stake to try to lure another potential suitor or following the Crown board’s lead.

Blackstone lobbed its $11.85 a share indicative bid a fortnight ago.

The bid comes as Crown is the subject of royal commissions in West Australia and Victoria after the NSW inquiry found that the casino giant was unfit to hold a licence.

Crown shares were trading at $11.82 on Tuesday afternoon.

Crown Resort sale could lead to asset break up

James Packer’s Crown Resorts was recently put in play when the world’s biggest private equity firm made a bid for the embattled gambling company.

The Sydney Morning Herald reported in March that while Blackstone’s cash bid at $11.85, valuing the company at $8 billion was widely viewed as opportunistic, it has allowed attention to turn on the value of Crown if it was broken up.

If Crown’s assets, its casinos in Melbourne, Sydney and Perth, were pulled apart and auctioned off to the highest bidders, then the value for its potential suitors lies not just in its $5 billion in hotel and resort assets, but potentially its gaming licences.

Typically, a casino’s gaming licences and property assets are linked, but they can be sold separately.

On its balance sheet, Crown values those licences at $1 billion, but that was before the coronavirus pandemic and the damning findings of the New South Wales Bergin inquiry.

The inquiry, which released its report in February, found Crown’s Melbourne and Perth casinos had been infiltrated by organised crime groups and used to launder money, confirming an investigation by The Sydney Morning Herald journalist Nick McKenzie.

The Bergin inquiry found Crown was unfit to operate its Sydney licence, and its casino floors that were due to open in 2021 remain closed.

Royal commissions reviewing Crown’s licences in Victoria and Western Australia are underway.

Those developments have raised questions about the value of Crown’s licences and explain the low-ball bid from Blackstone.

The value of Crown’s licences have also been hit by the recommendation in the Bergin report to ban junket operators, some of which were found to have links to organised crime.

Crown Sydney’s business model, in particular, was heavily dependent on revenues from international tourism and junket operators who bring in high rollers.

Crown’s Sydney licence does not permit it to have poker machines, unlike its rival Star Entertainment, which holds the other Sydney casino licence.

There has been speculation that Star, the smaller of the two casino companies, could be a possible bidder for Crown.

William Brown

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