James Packer tells commission ‘no current plan’ to sell $2.5bn stake in Crown Resorts
James Packer will eventually have to sell his 37 per cent stake in Crown Resorts, but his appearance at a WA royal commission has raised questions as to when.
James Packer says he has no objection to a forced selldown of his $2.5bn stake in Crown Resorts as he acknowledged there were “many oversights” during his time at the helm of the casino group.
The reclusive billionaire dialled in from his polo ranch, Ellerstina, outside Buenos Aires, in his first public appearance in more than a year to front Western Australia’s royal commission into Crown. Wearing a black suit, heavy black-framed glasses and a red tie, Mr Packer spent almost three hours giving evidence, answering questions in a calm, considered way, sometimes taking lengthy pauses to frame his response.
Towards the end of the hearing he was asked whether he objected to a recommendation – made this week from Victoria’s separate royal commission into Crown – that he sell down his stake, held by Consolidated Press Holdings, from 37 per cent to 5 per cent.
“I don’t object to that requirement,” Mr Packer said.
But he said his lawyers may have an issue with its September 2024 deadline.
He told WA commissioner Lindy Jenkins that while he agreed to the selldown, there was confusion over the three-year time frame in his legal team, given CPH had already reached an agreement with NSW’s gaming regulator to extend a forced share sale out to October 2026.
“I believe my lawyers believe that there may be some misunderstanding about the date in the sense that the initial date, the date that the Victorian royal commissioners used, was the original date that we gave undertakings to in NSW – and we extended those undertakings,” Mr Packer said.
His comments came after he said in a witness statement before the hearing that “CPH and CPH Crown Holdings have no current plan or proposal in respect of their shareholding in Crown Resorts”.
“I am unaware of any plan or proposal of any other party concerning that shareholding.”
Mr Packer’s appearance at the commission comes more than a year after his last public appearance at NSW’s Bergin inquiry into Crown and just days after the Victorian commission’s final report was released, slamming his “harmful influence” on the company he once chaired.
Like the Bergin inquiry, which temporarily revoked Crown’s NSW casino licence and resulted in Mr Packer being slapped with shareholder restrictions, Victorian commissioner Ray Finkelstein recommended Crown be overseen by a “special manager” – who would have unprecedented power to veto board decisions and audit company accounts – for two years. This was proposed instead of ripping up Crown’s licence, which Mr Finkelstein said would not be in the public interest.
The Victorian government has said it supports the findings of the Crown probe “in principle”, but has only acted to implement nine of Mr Finkelstein’s 33 recommendations while taking time to consider its response to the others.
Its ultimate determination on when to set the deadline for the sale of Mr Packer’s stake will be an important point of detail for groups looking to make takeover plays for Crown.
Blackstone, which owns 9.99 per cent of Crown, is thought to be still interested in the company after making two rejected tilts last year, while rival Star Entertainment is thought to be looking for value creation opportunities after pitching and then withdrawing a $12bn merger.
US private equity firm Oaktree also made two $3bn proposals to fund a Crown Resorts buyout of Mr Packer’s stake and clear his name from the share registry in exchange for debt and equity.
Mr Packer would not be drawn on whether he preferred a sale date of 2024 or 2026 when his lawyer, Noel Hutley SC, asked him whether he intended to “indicate an acceptance” of selling down by either of those two dates.
“I’d like to rely on my legal counsel for advice,” Mr Packer replied. “I’m very reluctant to in any way argue with commissioner Finkelstein, so I’d prefer to leave it at that.”
Mr Packer confirmed it was his decision to sell the shares, even though his sister Gretel Packer remains the beneficiary of some of CPH’s Crown shares.
Earlier, Mr Packer was grilled about his time as chairman of Crown’s Perth subsidiary Burswood Limited from 2004 – when the Perth casino fell into the hands of the Packer family – until 2016, after mental problems saw him take a step back at Crown.
Mr Packer acknowledged there were “many oversights” during his time overseeing Crown Perth, from not appointing a director with financial crimes or anti-money-laundering experience to his lack of attendance at board meetings from 2013 to 2016.
Although he warned the commission in his witness statement that the “strong medication” he was taking affected his memory, he hit back against the assertion that he was “disengaged and disinterested in any aspect of Crown Perth’s operations other than its financial performance”.
“There is no doubt I should have attended or resigned,” Mr Packer said.
“I do not accept that I did not stay on top of what was happening at Crown Burswood.”
Mr Packer defended his support of extending Crown’s VIP international gaming and junket business – even as it helped create the money-laundering risks that led to Crown’s current regulatory troubles.
“My response is I believe that risk could be managed, I believe that every state we operated in – Western Australia, Victoria or NSW – wanted Crown to increase its VIP business,” he said.
“I was aware of many rumours about many things, but Crown had also been operating in Macau from 2004 to 2016 and we had no problem with the Macanese regulators on that front.”
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