Crown Resorts may split assets as cushion against Macau slump
Sydney
AUSTRALIAN casino firm Crown Resorts Ltd may split most of its domestic assets off into a new listed company, seeking to cushion those operations from the slide in business at Asian gambling hub Macau, which has hammered its shares.
In a statement on Wednesday, Australia's No 1 casino company said it is considering setting up a new listed property trust for its Melbourne and Perth hotels, while demerging its international investments into a separate listed firm. It did not say how much the businesses might be worth.
The move comes after months of speculation about majority owner James Packer's plans for the company after Australia's third richest man stepped down as chairman in August.
As the firm suffered in the Macau downturn and invested away from its core gaming business, shares tumbled 17 per cent in that time, squeezing the firm's market value to A$8.2 billion (S$8.22 billion).
"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," Crown chairman Robert Rankin said in the statement.
In February, Crown reported a 35 per cent slump in first-half profit due to a drop in Chinese high-rollers at its Macau casinos. The Macau venture, Melco Crown, accounted for more than 30 per cent of the company's total net profit for the year ended June 2015.
In May this year, Crown Resorts lowered its stake in Melco Crown to about 27 per cent from 34 per cent previously. On Wednesday, Crown Resorts said that stake was worth A$2.7 billion, and that it continued to have "great faith in the long-term development of the Macau market".
The company said it planned to hold a news conference on its plans on Thursday morning.
In a move likely to be welcomed by investors, Crown Resorts also revised its dividend policy to boost cash returns to shareholders, offering to pay 100 per cent of net profit effective immediately. The new dividend policy will not alter its intention to maintain a strong balance sheet and credit profile, it added. Crown Resorts is currently rated two levels above junk grade by the three major credit ratings firms.
Investors have grown concerned about the company's move away from non-gaming assets, including last October's US$100 million purchase of 20 per cent of the Nobu restaurant chain part-owned by movie star Robert De Niro.
In May, Australian fund manager Colonial First State exited its investment in Crown Resorts citing concerns about governance and board independence, as well as the investment in Nobu. REUTERS
