Things are getting dire for James Packer's casino empire. This, after so much takeover interest.
Crown Resorts‘ auditor on Thursday warned that numerous money-laundering probes into the Australian casino operator and the impact of the COVID-19 pandemic cast “material” uncertainty over the company’s ability to continue as a going concern.
Crown has been embroiled in legal battles and scandal since allegations of money laundering at its Melbourne casino emerged in 2019. In June, financial crime regulator extended a probe into its flagship casino in Melbourne, to also include its operations in Perth.
The company, in which billionaire James Packer has a 37% stake, also said the Australian Transaction Reports and Analysis Centre (AUSTRAC) was “very likely” to launch civil proceedings against its casinos in both cities.
“If it does so, it is likely that Crown Melbourne and Crown Perth will be required to pay significant civil penalties,” it said in its 153-page annual report released on Thursday.
KPMG, Crown’s auditor, also said the cancellation or suspension of any of its casino licences could trigger default on some of its debts.
If that occurred, the report said Crown had negotiated some waivers with its financiers which would provide “a period of time to negotiate with lenders or otherwise refinance the facilities”.
Its bonds are also at risk of having to be repaid if its credit rating falls below investment grade, KPMG added.
“The conditions disclosed … indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern,” the auditor said in the report.
To address a potential liquidity shortfall, the company had also obtained a waiver of financial covenants from its banks until the end of the year, and extended the maturity of its banking facilities until October 2023.
It also secured an additional A$250 million debt facility commitment with its banks, which could be used to repay its bonds should it need to do so.
Crown shares, which have fallen 26% since its 2019 highs, were 1.5% lower to close at 9.76 on Thursday, slightly overperforming a wider market that fell 1.9%.
The troubled firm has received takeover approaches from several suitors this year, including from investment giant Blackstone Inc and smaller rival Star Entertainment Group. However, both proposals have been withdrawn as Crown struggles to rebuild its image amid multiple Royal Commission enquiries.
(Reporting by Paulina Duran in Sydney; Editing by Emelia Sithole-Matarise and Elaine Hardcastle)
Subscribe to Skift Pro
Subscribe to Skift Pro to get unlimited access to stories like these ($30/month)Subscribe Now
Photo Credit: Crown Resorts' flagship casino property in Melbourne. Donaldytong / Skift
A Deaf Traveler Opens Up About Making Travel More Accessible
Accessible travel shouldn't be something to be checked off a list. Instead, Marlene Valle says, it's a human right.
Ruthy Munoz | 21 hours ago
How Far Will Google Take New Hotel and Environment Claims?
It's a nice step for Google to provide more information about hotels' sustainability practices in search results. But will the company have the guts to get "political," in the eyes of some, and push hotel listings higher or lower based on environmental practices?
Dennis Schaal | 1 day ago
Tripadvisor Forced by Hotel Chains to Reverse Course on Subscriptions to Cash-Back Model
We said all along that major hotel chain buy-in would go a long way toward determining the trajectory of Tripadvisor Plus. Now it appears that big hotel brands may participate, but the subscription program is scaled back and much less compelling.
Dennis Schaal | 3 days ago