James Packer splits Crown casino business

A multi-billion dollar break-up will see James Packer’s Australian casinos split from his offshore assets.

Today’s move is the second demerger of Mr Packer’s listed company operations in the space of a decade. Picture: Justin Chin/Bloomberg.

James Packer has announced a multi-billion dollar break-up of his gaming empire that will see his Australian casinos split from his offshore assets.

In the second demerger of Mr Packer’s listed company operations in the space of a decade, his Crown Resorts properties in Melbourne, Perth and Sydney will be housed in one company while his interests in Asian gaming company Melco Crown Entertainment will be put into a separate listed vehicle.

Crown will explore a potential IPO of a 49 per cent interest in a property trust which would own Crown Resorts’ Australian hotels (excluding Crown Towers Melbourne), with Crown Resorts retaining a 51 per cent interest.

The international assets to be demerged in addition to Melco will be Crown Resorts’ investment in the Alon development site in Las Vegas, Crown Resorts’ 20 per cent holding in Nobu, Crown Resorts’ 50 per cent holding in Aspers and Crown Resorts’ investment in Caesars.

Crown has also confirmed a report in The Australian that Mr Packer will not take a salary from Crown after last year proposing that he begin being paid a salary for the first time.

Earlier this year Mr Packer stepped down as chairman of Crown Resorts, handing over to the chief executive of his private company, former investment banker Rob Rankin. Mr Packer then subsequently left the board.

“I am fully supportive of the board’s decisions today. Crown is one of Australia’s most successful tourism and leisure company’s and I am extremely proud of what we have achieved with our resorts in Australia, but also across Asia,” Mr Packer said.

“This new corporate structure, well positions Crown for the next decade as we continue to grow our business and meet the needs of the emerging Asian middle class.’’

The key reason for the deal is to get a clean valuation of the Australian assets - Crown believes they are undervalued versus the Star because of Macau.

Mr Rankin will also not take a salary and continue to be paid by CPH.

Meanwhile, Crown will adopt a new dividend policy to pay 100 per cent of normalised net profit after tax (before minorities and excluding profits from associates but including dividends received from associates), effective immediately.

“The proposed demerger reflects the different nature of Crown Resorts’ controlled Australian operating assets from its international investments,” Mr Rankin said. “It will provide investors with greater investment choice and transparency on the underlying quality of all of Crown Resorts’ assets.

“...Crown Resorts has achieved cash returns equivalent to double the total cash it has invested in Melco Crown Entertainment (MCE) and still holds a 27.4 per cent interest in MCE valued at approximately $2.7 billion. Crown Resorts continues to have great faith in the long-term development of the Macau market.”

The demerger comes after Crown considered a split of its empire last year as part of a planned privatisation of the company.

At the time it was comtemplated a property company would hold its extensive network of ­casino resort properties in Australia, Macau and The Philippines and future properties in Las Vegas and potentially Japan.

A separate operating company would have held the management rights for the companies.

Overseas, Crown will continue to own and operate the Crown Aspinall’s casino in London.

Melco Crown is run by Chinese billionaire Lawrence Ho.

Last month Crown cut its stake in its Macau-focused casino partnership in a $US800 million ($1 billion) deal as the region struggles with weak gaming revenue. Mr Crown also stepped down as co-chairman of Melco with Mr Ho.