UPDATE: Echo Entertainment chairman John Story has announced he will step down from Echo’s board. Echo issued a statement saying: “The board of Echo has formed the view that the ongoing disruptive campaign … for the removal of Mr. Story was damaging to the company, and that it was in the best interests of shareholders that Mr. Story not contest the resolution.” It’s not known if the July 20 vote to consider appointing Jeff Kennett to the board will go ahead. John O’Neill, a non-executive director at Echo and CEO of the Australian Rugby Union, has been appointed as Echo’s acting chairman.
The Star Casino in Sydney, Australia has launched legal action to reclaim over $23m in credit it advanced to 10 international VIP gamblers. The debts were revealed last week when Star parent Echo Entertainment announced a $30m writedown following the collapse of junket operator SilkStar Global Marketing Ltd. earlier this year. The Star filed suit against some of the deadbeat whales in New South Wales Supreme Court on February 27 and additional suits were launched on June 5. The Daily Telegraph says the whales include Thai property developer Nattachai Srirungsukpinji; Pimchaya Wattanakulyothin, a Thai businesswoman who made her fortune in an Amway-style direct marketing company; and Chin Meng Pun, a Macau businessman.
Meanwhile, the fight over control of Echo’s board of directors continues. Crown Ltd. boss James Packer (pictured right), who holds a 10% stake in Echo, may have won his right to a shareholder vote on whether to remove current Echo chairman John Story and replace him with Packer’s likely lad (and ex-Victorian premier) Jeff Kennett, but there’s a fly in the ointment. The Australian Financial Review reports that investment group Perpetual, which holds just under 10% of Echo and a similar size stake in Crown, will not back Packer’s board seat bid when the vote is taken on July 20. Perpetual’s head of equities Matt Williams was quoted as saying the company “does not support” Packer’s play because a 10% stake “is nowhere near enough to have a director on the board of a major competitor.” Then again, perhaps it’s just a visceral reaction to Packer’s threats to Echo shareholders that, should they spurn his bid, he’d step up his public campaign to damage the Echo brand. (One imagines he then threw his toys out of the oversized pram.)
Further complicating matters, The Australian reports that Malaysian casino operator Genting has quietly amassed a 4.9% stake in Echo over the past two weeks using JP Morgan as its cover. A regulatory filing in Singapore stated that Genting Singapore had boosted its stake in an unnamed investment to 5.1%, the bulk of which is believed to be in Echo. (A Genting spokesperson subsequently issued a brief statement: “We have a stake in Echo as part of Genting Singapore’s investment portfolio.”) With money pouring in via its Resorts World Sentosa operation, the suggestion is that Genting could afford to pay the premium necessary to acquire Echo – a premium that Packer seemed hell bent on avoiding if he could, but which now seems inevitable.