Crown could lease out properties if its woes continue

by Noah Taylor Last Updated
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Embattled casino operator Crown Resorts casinos could lease some of their properties, to salvage the investment shareholders have made in the company, according to incoming chief executive Steve McCann.

The Sydney Morning Herald reports that if the gambling group is stripped of its licences, it would consider leasing its venues.

Former Lendlease boss McCann said in an interview there had been “a lot of inbound inquiry” from potential partners and buyers interested in Crown and that all options would be on the table if royal commissions in Victoria and WA find it unfit to run its Melbourne and Perth casinos.

The licence for Crown’s new Sydney casino is already suspended after a NSW inquiry confirmed in February reports that Crown had enabled money laundering at its other properties and had been infiltrated by organised crime syndicates.

“Clearly we have to anticipate a range of scenarios and be flexible enough to respond to the scenarios that are presented,” Mr McCann said, while declining to speculate about what he thought the likely outcome would be.

Crown has already become a takeover target in 2021.

It rejected an $8.4 billion takeover bid from private equity outfit Blackstone in May.

And its Sydney rival, The Star, also lobbed a $12 billion merger proposal in May but has since withdrawn the offer, citing uncertainty about the future of Crown’s licences.

Crown focused on keeping licences

Mr McCann, who was appointed Crown CEO in June but is still awaiting approval from gambling regulators, said there was broader interest in Crown’s assets.

But the company’s focus was on retaining its licences and reforming the business, and only then would it look at structural options.

“There’s been a lot of inbound inquiry on a range of structures, some of them are already public,” he said.

Investors and analysts have turned their minds to how much Crown, which has a market value of $6.4 billion, down almost 30 per cent since early May, would be worth if it lost its licences and had to lease out its properties to another operator.

Macquarie analysts put the figure at $4.8 billion to $5.2 billion, while JP Morgan said it would be worth $5.5 billion.

The so-called “opco-propco” (operating company/property company) model is becoming increasingly common in the global casino industry.

The Star, for example, announced that it would look to sell and lease back its Sydney casino property.

But Mr McCann said Crown would only consider that model if one of Crown’s licences was cancelled and it was not given the opportunity to reform itself to win the licence back.

“That scenario would be sub-optimal for everybody because operating an integrated resort…is better achieved with everything together,” he said.

“So it’s not an ideal scenario, but it’s not something we’d rule out if we have to head in that direction.”

Meanwhile, Crown’s incoming chairman, the prominent businessman Ziggy Switkowski is facing calls to resign from his position as chancellor of Melbourne’s RMIT University over claims his new role at the gambling giant was incompatible with the university’s values.

The National Tertiary Education Union, which represents university staff and academics, said that Crown had been “shown time and again to be a socially destructive force”, making it “untenable” that Dr Switkowski stays at the university.

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