James Packer has $230m on the table as Crown’s sale of stake to Melco probed by regulator
James Packer has $230m at stake as a NSW agency probes the sale of Crown shares to Lawrence Ho.
James Packer has almost 250 million reasons to worry as a probe into the selldown of his holdings in casino group Crown Resorts looms.
Packer had announced in late May that he was to sell about $1.759 billion worth of Crown shares to Hong Kong casino mogul and former business partner Lawrence Ho.
That deal was pegged at $13 per share and involved Packer selling about 135 million Crown shares, or about 19.99 per cent of the company, leaving him with a holding of about 26 per cent.
But all hell has broken lose in the past few weeks, putting the terms of the sale to Ho in doubt and potentially leaving Packer — who has indicated he wanted to diversify his investment portfolio that is now mostly centred around Crown stock — stuck with his large chunk of his shares in lieu of a sale to another party potentially more palatable to regulators.
Given the price of Crown shares during trading on the ASX on Monday, the value of the stake Packer was planning to sell to Ho has fallen to about $1.53bn — about $230m less than the agreed to sale price in May.
Crown shares had slumped to a low as $11.29 on Monday morning.
If regulators decide not to allow the sale to Ho, Packer is down $230m on paper from the amount he would have reaped. If the sale goes through, then Ho is already down that same amount on his investment — albeit those figures are without a subsequent recovery in the Crown share price.
Packer this year ranked at No. 15 on The List — Australia’s Richest 250, published by The Australian in late March with an estimated $4.23bn fortune.
Crown has been mired in controversy for several weeks after reports by Nine newspapers detailed a series of allegations against the gambling giant, which owns and operates casinos in Melbourne and Perth and is building a luxury complex in Sydney’s Barangaroo.
Allegations have included links to Asian crime gangs via the use of junket operators and the laundering of money through its Melbourne gaming venue.
Crown has strongly defended its business, mostly via full-page newspaper advertisements from its board of directors that have labelled the Nine reports as “unbalanced and sensationalised”.
But late last week the NSW Independent Liquor and Gaming Authority (ILGA) announced it would conduct an inquiry into the sale of the stake to Ho, which Crown has said it would fully co-operate with.
Whether the ILGA inquiry results in the derailing of Packer’s deal with Ho remains to be seen — half of the transaction occurred in June and the other half is slated to be done by September — but the controversy around Crown has caused its share price to fall.
Crown shares had earlier this year been recovering from a tumultuous period after the fallout from the arrest of 19 of Crown’s staff in China in 2016.
The company’s board has been at pains to defend the company’s conduct during that time — a central part of the allegations aired in Nine outlets — but Crown director Geoff Dixon offered an insight in Damon Kitney’s Packer biography The Price of Fortune released last year.
Dixon was careful not to comment directly on the China issue in the book, given a class action from disgruntled investors is still at hand, but noted that companies with the size and heritage of Crown “are going to have the occasional misstep, if that was a misstep. It was, for want of a better word, an unfortunate episode. We did a very good job in resolving it.”
Packer will still hold $2.05bn of Crown shares if he is to complete the sale to Ho, down about $250m since the deal was revealed in late May.
The Melco deal bombshell came about six weeks after Crown said it had been in discussions with US giant Wynn Resorts regarding a potential takeover at an even higher price of $14.75 per share. Had that transaction eventuated Packer would have received about $4.67bn in cash and shares.
Packer also owns property in the US, Mexico, Argentina and Israel and recently took delivery of a new $200m super yacht.
Are financial advisers worth the money?
Financial advisers are a steady hand when markets wobble. But do they deliver on the returns front? New data shows that it depends on a few key things.
To fix or not to fix, the answer is not what you think
Anyone with a mortgage or about to get one might think variable rates offer the best chance to take advantage of an expected falling cash rate. But fixing now might be a smarter option.