Oaktree makes second bid for Crown Resorts

by Charlotte Lee Last Updated
Oaktree makes second bid for Crown Resorts

Crown Resorts has received an updated takeover offer from Oaktree Capital.

The Market Herald reports that Oaktree Capital has submitted a revised funding proposal to Crown which could be used to buy back James Packer’s stake in the casino operator.

The seven-year $3.1 billion deal consists of a private loan worth $2 billion and a $1.1 billion loan convertible into new shares.

The convertible component could allow Okatree Capital to acquire a 10 per cent stake in Crown.

The revised offer comes after Crown formally rejected a separate offer from private equity firm Blackstone, while another takeover bid by rival Star Entertainment is still under review.

The convertible component of the deal would allow Oaktree Capital to acquire the new shares at a price of $13 each in specified circumstances, including at any time after the first anniversary of the facility provided that the Crown share price is above $13, based on a 30-day volume weighted average price.

However, the number of shares issued to Okatree would be capped at an amount that ensures the Los Angeles-based asset manager cannot hold more than 10 per cent of Crown’s shares on issue.

The revised offer is slightly higher than an earlier one that was put forward in April and focuses largely on funding “a selective buyback” of Packer’s 37 per cent stake, which he owns via his holding company, Consolidated Press Holdings.

Packer has been a central figure in the recent criticism of Crown’s operations, which ultimately led to regulators finding the company unfit to hold a gambling licence for its new Sydney casino.

With regulators citing Packer’s influence as at least partly responsible for alleged activities such as money laundering, he previously indicated he would be willing to divest his holding.

Among a host of recommendations, a report published earlier this year suggested making anyone with a stake in Crown controlling more than 10 per cent subject to the same high standards of character and propriety as the licensee itself.

Meeting those standards could be difficult for Packer after he made what the report called a “disgraceful and shameful threat” to a businessman advising on potential privatisations of Crown.

Crown still pondering Star Entertainment takeover bid

Oaktree’s revised deal comes only a couple of weeks after Crown formally dismissed a separate proposal from Blackstone Group, under which the firm offered to acquire all of Crown’s shares at $12.35 each.

Another proposal from Star, would exchange 2.68 of its own shares for each individual Crown share, valuing Crown’s stock at more than $14 each.

Crown says it has not yet formed a view on the merits of Oaktree’s new offer and that its shareholders are not required to take any action at this stage.

Crown shares dipped 0.49 per cent at the open of Tuesday’s trade.

The significant role played by Consolidated Press Holdings in the day-to-day operations of Crown and its Board of Directors was one of the key takeaways from the 2020 Bergin inquiry, which ultimately found Crown unsuitable to hold a casino licence in New South Wales.

CPH has since reached an agreement with the NSW Independent Liquor and Gaming Authority that would effectively ensure it remains distant from the day-to-day business dealings of Crown.

The agreement forms a key part of the ongoing negotiations between the Independent Liquor and Gaming Authority and Crown.

Some of the key proposed undertakings by CPH include: not entering into any information sharing arrangements with Crown; not initiating any discussions with Crown, other than through public forums, about Crown’s businesses or operations; not seeking to have its executive or nominee appointed to Crown’s board; and not seeking any amendment to the Crown constitution which would affect the management or operation of Crown’s businesses.

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