Blackstone yet to receive needed regulatory approvals, Crown Resorts delays scheme meeting

The private equity firm was hoping for an accelerated turnaround in its bid to acquire the James Packer-backed casino group.

The Crown Resorts acquisition has not gone to plan. Picture: Bloomberg

Blackstone has not received the required regulatory approvals for its $8.9bn

takeover of Crown Resorts, forcing the gaming giant to delay a planned meeting on the takeover for three weeks.

The vote has now been rescheduled from this Friday to May 20. It is understood that the casino group is confident Blackstone will obtain approvals from gaming regulators in NSW, Victoria and Western Australia during that time.

Blackstone has been working with the NSW regulator since late last year. But approval times are unpredictable.

In mid February, the NSW independent Liquor & Gaming Authority flagged it would grant Crown conditional approval to finally open its gaming floor at its new $2.2bn Barangaroo casino by March. But that so far has yet to eventuate.

The NSW Bergin inquiry recommended that Crown was not suitable to hold a NSW casino licence after the group facilitated money laundering and other organised crime. Similar inquiries in Victoria and WA have made similar findings, while the NSW regulator has since launched a separate inquiry into rival Star Entertainment.

“Crown has been informed by Blackstone that, while good progress has been made in obtaining the gaming regulatory approvals required under the terms of the Scheme Implementation Deed dated February 14 2022, those approvals have not yet been obtained by Blackstone,” Crown said in a statement to the ASX.

A spokeswoman for Blackstone, which has already received Foreign Investment Review Board approval, said it was working “constructively with regulators in relation to this transaction”.

“We look forward to bringing our significant expertise in global hospitality, tourism, and gaming to help Crown’s resorts grow as world-class leisure destinations making a positive contribution to the Australian economy.”

It is understood the delay is not related to the legal action launched by the financial crimes regulator, Austrac, and the Victorian gaming regulator, which could see Crown slapped with blockbuster fines.

Crown is facing a fine of up to $100m from the Victorian gaming regulator over the use of Union Pay cards to illegally transfer funds from China, while Austrac has launched civil action, alleging Crown broke money laundering laws more than 500 times – attracting a penalty of up to $22.2m per breach.

The move threatens to derail US private equity giant Blackstone’s $8.9bn takeover of Crown, which contains an exit clause if any fine or liability tops $750m.

If the Blackstone deal fails, it will not only stop Crown’s major shareholder James Packer from receiving a $3.3bn payday from his 37 per cent stake, but likely trigger a share price fall for Crown and a refinancing of the company’s debt and $89m break fee.

In its independent export report on Blackstone’s takeover of Crown, Grant Samuel said if Crown’s liabilities, including regulatory fines, total $680m – or $1 a share – that would bring Crown’s value to as low as $11.52 a share. This compares with Blackstone’s offer of $13.10 a share.

Crown’s share price firmed 0.2 per cent on Tuesday to $12.87. This compared with a 2.1 per cent fall across the broader share market.