Crown Resorts is shuffling the deck. The Australian gambling giant had planned a demerger of its international assets and also had plans to develop the Alon Las Vegas casino, which would have been the first Crown Resort casino in the United States.
Crown confirmed that it would no longer proceed with the de-merger plans and would also drop its plan to proceed with the Alon Las Vegas casino. Crown Resorts has also disposed a significant percentage of its shares in Macau joint venture Melco Crown Entertainment. The company reduced its share percentage from 27.4 percent to 14 percent and in doing so has raised an additional A$1.6 billion. The stake has been purchased by Lawrence Ho, who is a partner in the joint venture. Ho now controls 51 percent.
This is the second time this year that Crown Resorts has disposed shares in its Melco Crown venture as back in May 2016, the company sold a percentage of shares to MID, a company owned by Lawrence Ho and raised around A$1 billion. This marks the third time that Crown Resorts has abandoned a foray into the U.S gambling market.
The company also announced that it expects revenue to decline by 12 percent during the second half of 2016 and believes that VIP gaming revenue will drop by as much as 45 percent during this period. The money raised from the sale of its Melco Crown stake will be used to reduce the company’s debt and also for a share buyback program and a special distribution to the company’s shareholders.
In a statement, Robert Rankin, chairman Crown Resorts said “These business decisions are strategic and for the long-term and will underpin the company’s future over the next decade. The distribution of proceeds is for the benefit of all Crown Resorts shareholders and strikes the right balance between debt reduction and the company’s capital management programme.”
Crown Resorts is exploring the possibility of disposing its remaining 14 percent stake in Melco Crown and will only focus on the Australian market. The company reported a debt of around A$1.96 billion on June 30, 2016, and is also investing A$2 billion to develop the Crown Barangaroo casino in Sydney. The new facility was expected to target VIP gamblers from Asia, with a special focus on China but with the recent arrests, this marketing strategy might have to be changed going forward.
However Crown Resorts will still proceed with its move to spinoff up to a 49 percent stake in its hotel properties excluding its casinos in Perth and Melbourne.