Australian casino operator Crown Resorts has been placed on Rating Watch Negative by credit ratings agency Fitch Ratings after it announced plans to de-merger some of its international assets.

Melbourne-based Crown Resorts operates the Crown Casino And Entertainment Complex along with Crown Perth and had the score placed on its long-term foreign currency issuer default evaluation and its BBB senior unsecured rating after stating that it intends to dispose of certain international investments and raise its dividend payout ratio to 100% of net profits after tax.

Sydney-listed Crown Resorts revealed on Wednesday that it intends to de-merger its 27.4% interest in Melco Crown Entertainment, which operates Macau’s City Of Dreams resort casino, along with its investment in the Alon development site in Las Vegas. In addition, the Australian firm declared that it intends to dispose of its 20% holding in the Nobu restaurant chain, its 50% share of UK casino operator Aspers and its investment in Caesars Growth Partners.

“The Rating Watch Negative reflects Fitch Ratings’ view that the de-merger will result in the removal of material investments that will reduce Crown Resorts’ cash flow,” read a statement from Fitch Ratings. “Fitch Ratings believes that this, combined with the higher dividend, will lead to a weakening in Crown Resorts’ credit metrics, particularly as the company has a significant CAPEX pipeline for its Australian casino assets.”

Crown Resorts also runs London’s Crown Aspinalls while additionally holding significant stakes in online bookmaker CrownBet and the Betfair online betting exchange. The firm stated that it plans to place the de-merged investments in its InternationalCo entity with investors receiving new shares in the enterprise in proportion to their existing investment.

“The proposed de-merger will see an increase in Crown Resorts’ geographic concentration although Fitch Ratings notes the strength of its assets in Melbourne and Perth,” read the statement from Fitch Ratings. “We expect to resolve the Rating Watch Negative when we receive further information on the proposed capital structure for Crown Resorts and the proposed separately listed holding company, InternationalCo, and once the required approvals have been received.”

The de-merger plan remains subject to further approvals from the firm’s board of directors, the government and regulatory bodies while Crown is moreover evaluating an initial public offering for some of its Australian properties, which may include the Crown Promenade hotels in Melbourne and Perth and the under-construction Crown Towers Perth.

“Should Crown Resorts proceed with the initial public offering, it would place the hotels into a new real estate trust in which it would retain a 51% stake,” read the statement from Fitch Ratings. “While this proposal would see a further reduction in the asset base, the impact could be counterbalanced by the extent that the proceeds are directed to debt reduction.”

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