Crown pays out $205m as staff languish

Crown Resorts will push ahead with a $205m interim dividend despite standing down 11,500 staff and registering for JobKeeper.

Crown Resorts will push ahead with the payment of a $205m interim dividend to investors, including about $70m to major shareholder James Packer, despite standing down 11,500 employees and registering for the federal government’s JobKeeper payment scheme.

Rival The Star Entertainment Group also said on Thursday that 8500 of its staff were being stood down, meaning the two casino giants have stood down a combined 20,000 employees.

The move means about 95 per cent of the respective workforces of the gambling and hotel resort company’s are out of work.

Crown is going ahead with its dividend given it has already been declared, its shares have traded ex-dividend and a new $1bn in debt refinancing gave it a relatively strong balance sheet that will include about $300m in cash after the 30c-per-share dividend is paid on Friday.

Crown also said 1300 people remained on the construction site at Barangaroo in Sydney, working to complete the $2.2bn Crown Sydney casino and luxury hotel development by the original target of the end of the year, despite some recent temporary stoppages after some workers tested positive for the coronavirus.

Both companies also revealed pay cuts for senior executives and board members, though The Star went further than Crown, which said chief executive Ken Barton would take a 20 per cent pay cut at least until the end of June as part of a raft of measures in response to the COVID-19 pandemic.

Mr Barton’s counterpart at The Star, Matt Bekier, is taking a 40 per cent pay cut, while fees for The Star’s non-executive directors are being halved in comparison with a 20 per cent reduction for Crown’s chair Helen Coonan and that company’s non-executive directors.

The Star, which operates Sydney and Gold Coast casinos, has also deferred its interim dividend and borrowed an additional $200m. Star has applied to access the federal government’s $130bn JobKeeper wage subsidy program, which will provide workers with $1500 a fortnight.

Crown announced the standing down of its workers on Thursday morning, having shut its Melbourne and Perth casinos in late March in response to government orders to close non-essential businesses due to COVID-19, after spending much of the first part of March gradually reducing the capacity of its gaming floor and restaurants in line with social distancing requirements.

Crown also said it was raising slightly more than $1bn in debt financing, including a $450m project financing facility to support the construction at Barangaroo.

Mr Barton told The Australian the financing deals, as well as a slew of asset sales in recent years, meant Crown was in a relatively good position to withstand an extended period of closure, with cash costs falling to $20-30m per month.

“The important thing is the assets are all in good shape and Sydney will be fantastic when it is done. But equally important is making sure we stay close to all our people and we want to make sure we know how the JobKeeper process works, and do everything we can to get everyone we can to participate in that. In regards to the financing, we want to make sure we have all the buffers in place that no matter what comes our way we have our financial security to get through it all. We came into this with no senior debt … but given what is in front of us what will come out is cash outflows to keep properties going and also meet all the obligations to employees.”

Mr Barton said ANZ was the lead bank on the transaction, with funding also coming from Commonwealth Bank, NAB and Japan’s Sumitomo Mitsui Banking Corporation.

Crown still expects to complete the Barangaroo project by the end of this year and has 1300 people working at the site, though the pace of construction has slowed at times given social distancing requirements and a handful of positive coronavirus tests. It expects to recruit more than 2000 employees in the lead-up to its opening.

Crown is also providing about 950 rooms at its Melbourne complex and another 600 rooms in Perth to accommodate travellers spending 14 days in isolation after returning from overseas. Governments are paying some money to Crown, with health authorities taking control of the areas in use.

In addition, Crown has also donated nine tonnes of produce to create packaged meals for several charities and provided some accommodation to people experiencing domestic violence.

Mr Barton said Crown lawyers were still working on the NSW Independent Liquor and Gaming Authority’s inquiry into probity and licensing issues, which was postponed in mid-March.

“There’s still some work to do meeting requests for the production of documents, so for the time being we are keeping a watching brief on it and seeing what the demand for work to be done for the materials to be provided for the inquiry,” he said.

Crown shares rose 0.5 per cent to $8.30. Star rose 9.4 cent to $2.56.