Oaktree pitches Crown Resorts buyout of James Packer

Crown’s assessment of Blackstone’s $8bn offer faces a twist after a separate funding proposal that’d allow it to buy out James Packer’s stake.

CPH currently has a shareholding of 37 per cent in Crown Resorts. Picture: NCA NewsWire / David Crosling

Crown Resorts’ assessment of Blackstone’s $8bn takeover offer faces a twist as the casino group fields a separate proposal for funding that would allow it to buy out James Packer’s stake.

Rival private equity group Oaktree on the weekend lobbed an indicative, unsolicited offer for $3bn in funding to buy back “all or some” of the majority stake held by Mr Packer’s private company, Consolidated Press Holdings.

CPH is Crown’s largest shareholder with a 37 per cent stake, valued at just under $3bn at Crown’s Friday closing price of $11.92.

The Oaktree offer, received by Crown over the weekend, effectively values shares in the company at $12 each — above Blackstone’s offer of $11.85.

Crown’s share price lifted on Monday to close at $12, putting increasing the pressure on Blackstone to revise its bid price.

Crown told the sharemarket “a funding commitment of up to $3bn” would be made to Crown via “a structured instrument with the proceeds to be used by Crown to buy back some or all of the Crown shares which are held by Consolidated Press Holdings Pty Limited on a selective basis”.

The Australian understands the structured instrument would consist of a mixture of debt taken on by Crown and company equity received by Oaktree, potentially making the buyback more cost-effective than if Crown was to independently seek funding.

Crown’s board had not formed a view on the Oaktree proposal and would begin a review, the company said, but any selective buyback of Crown shares held by CPH would be subject to shareholder approval.

Meanwhile, consideration of the Oaktree proposal is likely to blow out the timeline for Crown’s consideration of the Blackstone offer.

CPH declined to comment.

But it is believed that CPH is not involved in the Oaktree proposal, and is open to assessing any offers made for the transfer of Crown shares deemed suitable by the Crown board. CPH earlier this month said it was “open to considering and will independently assess any suitable transaction for Crown shares”.

Oaktree Capital has a history with Crown and Mr Packer, having assisted Crown Resorts in its aborted Las Vegas expansion attempt by financing the $300m purchase of land on The Strip.

It was also involved in the contest for Channel 10, in which James Packer was a guarantor, after the network went to administration in 2017.

Anton Tagliaferro, investment director of Crown shareholder Investors Mutual, said the Oaktree offer gave the Crown board the “flexibility” to sever ties with Mr Packer without accepting Blackstone’s offer, after the NSW Bergin inquiry cited his negative cultural influence one of the reasons the company was unsuitable to operate its Sydney casino.

“Ultimately the only (takeover) offer on the table is from Blackstone and in our opinion, it significantly undervalues the company,” Mr Tagliaferro said.  “The future of the company ­really depends on what price Mr Packer will accept for his stake.”

The Oaktree funding pitch also comes after the NSW gambling regulator last Friday struck a preliminary agreement with CPH to limit its influence over the Crown board.

The agreed undertakings include CPH pledging to not enter “into any information sharing arrangements with Crown” and to not initiate “any discussions with Crown, other than through public forums, about Crown’s businesses or operations”.

It will also not seek “any amendment to the Crown constitution which would affect the management or operation of Crown’s businesses”.

Crown Resorts is also facing royal commissions into its suitability to operate its casinos in Victoria and WA, in which the influence of Mr Packer, his executives and nominee directors, will again be an issue.

Both commissions have sat for initial hearings. They are due to report in August and November respectively.

A second hearing date is yet to be determined for the Victorian commission, but the WA commission is due to sit again on Tuesday, when it will deal with applications for leave to appear before commissioners Neville Owen, Lindy Jenkins and Colin Murphy.

The WA commission expects substantive hearings, which could include appearances by current and former Crown directors, to begin in May.