Crown Resorts has announced a plan to split its international business into a new listed entity with the intention of launching an IPO of several of its Australian resorts.
Crown’s share in Macau operator Melco Crown will be placed into the new international holding company, along with its Las Vegas investment in Alon, it’s 50 per cent share in British casino operator Aspers and its stake in Caesars Growth Partners.
Crown Resorts will keep the company’s casinos and hotels in Melbourne and Perth and the hotel and casino under development at Sydney’s Barangaroo precinct. It will also retain Betfair Australasia and its 62 per cent stake in online bookmaker Crownbet.
James packer, who owns 53 per cent of the company, will no longer be employed as an executive of Crown Resorts, nor will he take a wage although he will continue to be focussed on Crown Resorts’ businesses, in particular continuing as the Deputy Chairman of MCE and optimising Crown Resorts’ capital structure/cost of capital and returns. He will also have a key focus on Crown Resorts’ online strategy.
“I am fully supportive of the board’s decisions today,” Mr Packer said. “Crown is one of Australia’s most successful tourism and leisure company’s and I am extremely proud of what we have achieved with our resorts in Australia, but also across Asia. This new corporate structure, well positions Crown for the next decade as we continue to grow our business and meet the needs of the emerging Asian middle class.”
Crown Resorts’ Chairman, Mr Robert Rankin, added: “We are pleased to announce that the Board has endorsed a number of initiatives designed to maximise shareholder value and ensure a more efficient ownership structure for the group’s assets.” “The Board has for some time been looking to address what we believe to be a material undervaluation by the market of Crown Resorts’ assets, due to a traditional consolidated (or amalgamated) structure. In particular, we believe that Crown Resorts’ extremely high quality Australian resorts are not being fully valued and the Crown Resorts share price has been highly correlated to the performance of its investment in Macau.”
“The proposed demerger reflects the different nature of Crown Resorts’ controlled Australian operating assets from its international investments. It will provide investors with greater investment choice and transparency on the underlying quality of all of Crown Resorts’ assets,” he added.
“Following the proposed demerger, investors will have the opportunity to invest in Crown Resorts which will own and operate Australia’s pre-eminent integrated resorts, with exciting developments such as Crown Sydney. Investors will also have the opportunity to invest in a separate company which will own a number of Crown Resorts’ international investments and provide exposure to the major gaming markets of Macau, Las Vegas and the UK.”
“Crown Resorts has achieved cash returns equivalent to double the total cash it has invested in Melco Crown Entertainment (MCE) and still holds a 27.4 per cent interest in MCE valued at approximately A$2.7bn. Crown Resorts continues to have great faith in the long-term development of the Macau market. Macau remains the world’s most important and exciting gaming market over the longer term.” “Crown Resorts’ revised dividend policy is expected to provide increased cash returns to our shareholders and reflects the strong earnings and cash flow generating capacity of Crown Resorts’ business and the company’s conservative balance sheet gearing following the sale of part of its MCE shareholding.”
He added: “An IPO of a property trust which owns most of Crown Resorts’ Australian hotels would provide an opportunity to realise significant value for our shareholders whilst maintaining a majority interest in key assets within our Australian business.”
Expected benefits of the demerger include providing shareholders and new investors with greater investment choice and the ability to tailor their investment towards their preferred company – increased transparency of the assets and operations of the two entities – the ability to implement optimal capital structures and dividend policies which reflect the differences in the underlying assets of each company – the potential for an increase in shareholder value.
Following the demerger, each company will have its own Board of Directors and management team. Robert Rankin will be Chairman of both companies. The Board of Crown Resorts will remain unchanged.
Rowen Craigie will remain the Chief Executive Officer and Managing Director of Crown Resorts. The Board of InternationalCo will include some of the existing Crown Resorts non-executive directors as well as some new independent directors. The management of InternationalCo is expected to consist of a small executive team supported by services and branding agreements with Crown Resorts.