James Packer is dipping into the savings of his private company, Consolidated Press Holdings
EXPERTS say James Packer’s new way of running his business can’t continue, with the tycoon paying himself up to hundreds of millions dollars more than his company has been making.
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EXCLUSIVE
JAMES Packer is eating into his private company’s savings by paying himself up to hundreds of millions of dollars more than the profit the business has been making.
The latest accounts from Consolidated Press Holdings reveals Mr Packer paid himself a dividend of $186 million in 2016-17, even though the company made a bottom line profit of $73 million.
In the previous financial year, the 50-year-old tycoon paid himself dividends of $252 million — four times the company’s net income of $64 million.
Mr Packer reportedly has been on a crusade to lower CPH’s debt since paying a $1.25 billion family settlement to his sister Gretel in 2015.
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It’s understood Mr Packer ratcheted up the payouts to himself for two reasons: CPH has lowered its debt and got a windfall from Crown Resorts. Two CPH’s subsidiaries landed more than $500 million from the ASX-listed casino company, which paid an extra dividend after selling much of its investment in Macau.
The debt reduction, of more than $1 billion, follows the sale of assets including Hollywood film-financing business RatPac and the Pretty Girl fashion chain.
The amounts Mr Packer is taking from CPH show a seismic shift in the way he runs his private company.
In the eight prior financial years to 2015-16, his dividend was less than what the company earned. Now he is paying himself more than company profits by dipping into CPH’s savings — its retained earnings.
Curtin University accounting expert Lee Smales said such “massively” increased dividend payouts compared to a company’s profits was often seen as a worry.
“Concerns would be raised if this trend continues as every time dividends are greater than net income there will be a reduction in retained earnings,” Dr Smales said.
But he said so long as CPH’s retained earnings — the percentage of net earnings not paid out as dividends — “remains positive there is not necessarily anything to worry about.” The latest accounts show CPH still holds nearly $4.2 billion in retained earnings.
“Provided appropriate accounting policies are followed and tax paid, James Packer can pretty much do as he pleases — including making a pay-off to Mariah Carey,” Dr Smales said.
The sale of CPH businesses has fundamentally changed the character of an empire set up by James’ grandfather Frank in 1954. CPH has even redefined itself for accounting purposes as an “investment entity”, which means it has to price all its assets on “fair value”, not cost.
Packer faces reported demands for a multimillion-dollar pay-off from ex-fiancee Mariah Carey.
The couple split in October 2016 after dating for 18 months. The pop diva reportedly asked for a $50 million settlement.
Mr Packer reportedly intends to ask Ms Carey to return the $12.7 million engagement ring he gave her.
Filings give Mr Packer’s address as Aspen, Colorado, where he spent Christmas with rumoured new girlfriend, New York socialite Kylie Lim.
Mr Packer declined to comment. CPH’s other directors, Mike Johnston and Guy Jalland, did not respond to requests for comment.