- »Packer’s Options Limited as Bergin Inquiry Questions his Suitability
Packer’s Options Limited as Bergin Inquiry Questions his Suitability
The findings of the Bergin inquiry could force Crown Resorts’ major shareholder James Packer to sell, the ABC reports.
Crown Resorts recorded a half-year loss of $120.9 million to December 2020 as COVID-19 restrictions kept its Melbourne casino closed for most of that period.
A year ago, it’s half-year profit was $218.2 million.
The Victorian government had imposed strict capacity rules at the site, fewer people attended as border restrictions separated Australia’s three most populous states – NSW, Victoria and Queensland – and the company said it logged costs of about $58.1 million relating to the mandated closures.
The lengthy list of board and executive departures during the past fortnight grew further, with news that general counsel Mary Manos would step down and the role would be separated from company secretary to double-down on Crown’s focus around legal and governance compliance.
In her report, Commissioner Bergin found it “intolerable” that James Packer demonstrated “forgetfulness or failing to turn one’s mind to” the need for casino operators to “remain free from criminal influence and exploitation.”
Her recommendation is that anyone with more than a 10 per cent stake in Crown Resorts would have to meet the same high standards of character and propriety as the licensee itself.
That could be difficult, given a “disgraceful and shameful threat” made by Mr Packer, detailed in the report, to a businessman advising on potential privatisation of Crown Resorts.
Mr Packer’s private investment company, Consolidated Press Holdings, owns around 37 per cent of Crown Resorts, fund managers Blackstone and Perpetual hold just under 10 per cent each.
But selling shouldn’t be a problem, according to Fitch Ratings’ director of South-East Asia Industrials Kelly Amato.
“We would expect that other casino and gaming operators around the world would have looked at Crown’s assets, purely because they have such strong domestic operations,” she said.
“With a limited number of licences and the governments across Australia indicating that they don’t want to issue any more licences, this is one of the few ways that those overseas operators will be able to get into Australia.”
Any sell-down would reduce the conflict created by Mr Packer having such a substantial share of the company.
Not only did the 53-year-old have multiple representatives on its board, but he also received secret briefings about the company’s finances.
Those meetings led Ken Barton, the long-time financial officer and briefly the chief executive, to apologise to shareholders at this year’s annual general meeting because he lied to them about the briefings at the 2019 meeting.
Crown’s futile attempts to sell
Crown’s initial attempts to force a buyout through US casino giant Wynn Resorts came unstuck in 2019 when a word of the deal leaked out.
“Following the premature disclosure of preliminary discussions, Wynn Resorts has terminated all discussions with Crown Resorts concerning any transaction,” Wynn said in a statement at the time.
Crown Resorts confirmed Wynn proposed to buy the company for $10 billion, about $3 billion more than its current market capitalisation.
Months later, Mr Packer sold almost half his stake in Crown Resorts for $1.76 billion to Lawrence Ho’s Macau-based entertainment company Melco Resorts and Entertainment.
The pair built a casino in Macau before the imprisonment of Crown staff in China forced the company to sell its investments in the country.
Selling 20 per cent of Crown Resorts to Mr Ho left Mr Packer’s CPH with about 26 per cent of the company.
“Crown has been a massive part of my life for the last 20 years and that absolutely remains the case today,” Mr Packer said at the time.
The sale immediately triggered probity reviews of Melco staff to determine if they were “fit and proper” to be involved in Crown’s casino in Melbourne and the harbourside complex in Sydney that was at the time, still under construction.