Moody’s downgrades Crown Resorts’ outlook

Moody’s has labelled Crown Resorts’ demerger and dividend policy a credit negative.

James Packer’s listed vehicle Crown Resorts is being reviewed by credit agency Moody’s, for a potential downgrade, following its de-merger plans and a new 100 per cent dividend policy.

Moody’s had put Crown’s ratings on review for a downgrade following news of its de-merger and dividend plans.

Moody’s said the proposed de-merger and increased dividend payout ratio would reduce retained cash flow and the company’s asset base materially, which it said was “credit negative” for Crown.

Crown plans to de-merge its international investments, splitting them from its Australian assets, to create a separate listed holding company

The casino operator also last week announced a new dividend policy to pay 100 per cent of normalised net profit after tax.

Moody’s said the new dividend payout could equate to around an additional $130 million in dividend payments.

Crown also plans to explore a potential market listing of a 49 per cent interest in a property trust that would own Crown’s Australian hotels (excluding Crown Towers Melbourne), with Crown retaining a 51 per cent interest.

Moody’s also outlined that given Crown would no longer receive dividend payments from its Macau interest, Melco Crown, and in view of the de-merger and dividend announcement, Crown would have fewer internally generated funds to contribute to the capital cost of the $2 billion Barangaroo project in Sydney.