And given the comments made by the NSW regulator,there is an expectation that Crown’s Sydney casino will also be given the green light to open some time this year following completion of the company’s rehabilitation process.
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Thus if Blackstone is proposing a risk-free offer,the Crown board will want it to reflect a risk-free price - one that reflects Crown’s earnings before COVID and before the NSW commission of inquiry disgorged a litany of its conduct shortcomings,including probable money laundering at its properties.
Of course there are some additional risks associated with the ownership of Crown that any buyer cannot avoid,including any fines that might arise out of the current AUSTRAC investigation and the potential for settling a shareholder class action.
But if one assumes that Crown ultimately satisfies regulators that its rehab is done,the value of its licences will not be particularly diminished.
The views of the Crown board around value,at this stage will be mirrored by Packer.
He made a highly unusual statement toThe Australian Financial Review on Tuesday that “I am following the Crown board re my position” in response to a question of whether he would sell his 37 per cent stake at $11.85.
That statement can be viewed in a number of ways,but it is certainly not tantamount to a legally binding commitment.
The statement could also reflect Packer’s attempts to satisfy regulators that he is taking a very hands off approach to the governance of Crown. In response to regulatory concerns about his influence on Crown all directors that represented his interests on the Crown board have resigned and all access rights Packer had to the company’s finances have been rescinded.
This opens a more complex question of whether Packer voting his 37 per cent in a takeover that is conducted via scheme of arrangement would breach any future regulatory condition that restricts his voting power to 10 per cent.
James Packer says he will follow Helen Coonan’s lead.
Normally,limiting voting rights would not present an obstacle to a shareholder exercising the right to sell shares. But if Crown cannot accept an offer conditional on a certain level of ownership because Packer doesn’t want to sell,the curly question of influence could come into the frame.
For the moment,Packer and executive chairman Helen Coonan’s four-person board seem to be on the same page so the solidarity hasn’t been tested.
All will be hoping that Blackstone’s offer was an opening gambit and that others will come into the auction room. But the cast of potential bidders must be looking a bit smaller now,thanks to the heightened focus on regulation.
For example,it is difficult to see how most of the large Asian casino/gaming companies would be allowed into the auction room given their links to junket operators.
Even many of the big US casino groups such as Wynn Resorts have operations in Macau that rely on junkets.
But this does not mean that other financial buyers similar to Blackstone won’t enter the race. Another private equity player,Apollo Global Management,for example,has been sniffing aroundTabcorp’s wagering business so it’s logical to suggest it might take a look at least.
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