James Packer’s Crown shares slump after 18 employees detained in China

LATEST: JAMES Packer says he is deeply concerned for the welfare of the Crown Resorts employees detained in China.

James Packer and Mariah Carey in Macau last year.

LATEST: JAMES Packer says he is deeply concerned for the welfare of the Crown Resorts employees detained in China.

Eighteen employees of Crown Resorts have been detained in China, with the Crown board meeting last night to receive an update on their situation.

Crown Resorts yesterday suffered its blackest day with $1.3 billion stripped from its market value as investors fret that the detention of its staff in China heralds a wider casino crackdown.

Mr Packer said this morning he had asked Crown to do everything possible to contact the staff.

“As the major shareholder of Crown Resorts, I am deeply concerned for the welfare of those Crown employees detained in China,” he said in a statement.

“I have sought regular updates on this issue and have asked Crown to do everything possible to contact our employees and to support their families, as we await further details from Chinese authorities.

“I am respectful, that these detentions have occurred in another country and are therefore subject to their sovereign rules and investigative processes.

“Crown will do whatever it can to support our employees and their families at this difficult time. Our number one priority is to be able to make contact and to ensure they are all safe.”

Crown Resorts said its board was briefed by the Department of Foreign Affairs and Trade last night on the situation.

“The Board was also provided with an update on the arrangements which were being made to make contact with the detained employees, and to support their families during this difficult time,” a Crown spokesperson said.

CROWN SHARES FALL

Shares in Crown fell 14 per cent yesterday on their first day of trading since it was revealed at the weekend that 18 employees, including three Australians, had been detained for gambling-related offences.

The rout – Crown’s biggest single-day share slide – handed casino mogul Mr Packer, who is engaged to US pop singer Mariah Carey, a $632 million paper loss through his 48 per cent stake in the company.

Among the Crown employees behind bars is Jason ­O’Connor, a Melbourne-based executive in charge of attracting international high rollers.

The detentions have raised concerns about the ability of local casinos to continue to tap into the highly lucrative pool of big-spending Chinese gamblers, with shares in rival Star Entertainment falling more than 5 per cent in intraday trade.

Crown yesterday said it believed Mr O’Connor was among those detained in raids carried out on Thursday and Friday.

“To date, Crown has not been able to speak with its employees and is working closely with the Department of Foreign Affairs and Trade to urgently make contact with and ascertain the welfare of its employees,” it said in a statement.

“Crown is yet to be provided with details of why its employees have been detained.”

IG market analyst Evan Lucas said investors were worried the detentions signalled that Chinese authorities were taking a harder line against casinos courting their citizens.

“There is a growing belief and expectation that the ­Chinese are gearing up for a regulation crackdown on gambling,” Mr Lucas said.

A two-year corruption crackdown and a slowing Chinese economy have already hit Crown’s operations in Macau – the only place in China where citizens can legally gamble.

Chinese punters are key to Crown’s Australian casinos as more than one third of their revenue comes from cashed-up international visitors.

Forager Funds Management analyst Daniel Mueller said China’s crackdown on VIP marketing would likely impact Crown’s Barangaroo development in Sydney given it was solely targeting high rollers.

“Having your largest source of VIPs possibly restricted would definitely impact the economics of that project,” Mr Mueller said.

It is illegal to promote gambling in China but casino operators are allowed to employ teams to advertise the luxury resorts side of the business.

China arrested 14 South Koreans for allegedly breaching these rules in June last year.

Industry watchers have also speculated a senior executive such as Mr O’Connor might have been visiting China to press for outstanding payments owed by major clients.

Mr Lucas said the events in China could see Crown move to accelerate plans to spin out its international operations into a separate company.

Shares in Crown closed $1.80 lower at $11.15 while shares in The Star Entertainment Group fell 21¢ to $5.52 on Monday.