Coronavirus kills James Packer's $880 million Crown casino stake sale
Friday 7th February 2020
Second tranche delayed by public inquiry into deal - then coronavirus hit
The coronavirus has killed James Packer's $880million deal to sell a large stake of the Crown casino empire to Hong Kong gaming tycoon Lawrence Ho.
Mr Ho's gaming and entertainment company Melco Resorts ditched a deal overnight to buy a second tranche of shares in Crown after its Asian casino business fell victim to the virus.
The Chinese enclave of Macau, the world's most lucrative gambling hub, shut down all 41 of its casinos from midnight on Tuesday for at least 15 days in an effort to halt the spread of the deadly virus.
From right to left: James Packer with singer Mariah Carey, Lawrence Ho and his wife Sharen at a casino opening in Macau, 2015. Mr Ho's Melco Resorts has bailed out of buying a second tranche of $880 million worth of Mr Packer's Crown stock, blaming the coronavirus impact
Lawrence Ho (left) with James Packer in Manilla, Philippines, in 2013. Mr Ho's Melco has purchased the first tranche of shares but not the second, and will not seek a seat on the board
In a statement released last night, Melco said it had decided to reassess all non-core investments for 2020 due to the impact of the epidemic after its business was hit by the resulting severe drop in tourism in Asia and the decision by Macau to close its casinos.
'As a result of this decision, Melco will not pursue its planned investment in Australia for the second tranche of shares in Crown Resorts Limited,' the company said in a release.
'While Melco believes Crown has world-class assets that are complementary to its global business, it is Melco's belief that, at this time, its capital needs to be deployed on its core assets.'
Mr Packer's Consolidated Press Holdings announced in May that it would sell 19.9 percent of Crown Resorts to Melco for $1.76 billion over two 9.99 percent tranches, reflecting a price of $13 per share.
Melco had already bought the first tranche of 67,675,000 Crown shares but will not now buy the remaining half.
The company also said it will not seek representation on Crown's board.
The second tranche sale was delayed after the NSW gambling regulator launched a public inquiry into probity issues including whether the share sale breached the terms of Crown's Sydney casino license.
The licence for the new Crown casino being built at Barangaroo bans Mr Ho's father Stanley and several associates from any involvement in Crown because of allegations of links to organised crime, the Sydney Morning Herald reported.
Crown rejected allegations by 60 Minutes and the Sydney Morning Herald last year that the company was exposed to money laundering, a breach of gaming regulations and human trafficking, and has introduced new measures to comply with the law.
Crown Resorts chair Helen Coonan told the ABC's AM program that Crown had appointed former NSW Police deputy commissioner Nick Kaldas to review its anti-money laundering and counter-terrorism financing compliance processes.
Crown Resorts second tranche sale was delayed after the NSW gambling regulator launched a public inquiry into probity issues. Now coronavirus has struck, scuttling the deal
Mr Packer was reported to have been wanting to take a step back from the pressures of running a multi-billion casino empire, with the Melco deal viewed as a resignation.
However he said in May at the commencement of the deal that it was to diversify his investment portoflio.
'Crown has been a massive part of my life for the last 20 years and that absolutely remains the case today - my continuing Crown shareholding represents my single largest investment,' he said at the time.
The deal's collapse means Mr Packer will keep a 36 percent stake in Crown Resorts.
Investment bank UBS last week said Australia's major casino operators, Crown and Star, would be two of the biggest potential losers from the coronavirus epidemic.
Crown Resorts share price has fallen from just over $13 in November to trade at $11.65 on Friday afternoon.
Consolidated Press Holding was trading at 16c per share early on Friday afternoon, down 3 percent from the open.
Australian billionaire James Packer will retain a 36 percent stake in Crown Resorts