Australian casino operator Crown Resorts has proposed spinning off its international operations and launching an initial public offering of a real estate investment trust (REIT) for its Aussie hotel properties.
On Wednesday, Crown issued a statement saying it planned to create a separately listed holding company that would include its 27.4% stake in Melco Crown Entertainment, which operates casinos in Macau and Manila.
The new company will also include Crown’s stake in the Alon development site in Las Vegas, its 50% stake in UK casino operator Aspers, its $22.5m investment in US casino operator Caesars Entertainment and its 20% stake in high-end restaurant chain Nobu.
Following the demerger, Crown would retain ownership of its four existing Aussie casinos and the in-development Crown Sydney, as well as its wagering and online betting businesses, which include CrownBet, Betfair Australasia and the DGN Games social gaming division.
The proposed REIT would own Crown’s Aussie hotels except for Crown Towers Melbourne. Crown intends to hold on to a 51% stake in this trust and has reserved the right to purchase some of the REIT’s outstanding shares.
Crown is also proposing amending its dividend policy to pay 100% of its after-tax‘ normalized profits – so dubbed because they smooth out the wild variance in VIP baccarat. Had this new rate applied to the past year’s results, Crown shareholders would have received around 70¢ per share rather than the 52¢ shareholders actually received.
Finally, Crown announced a new services agreement with erstwhile chairman and majority shareholder James Packer (pictured). When Packer vacated the chairman’s chair last August, it was proposed that he take a senior executive role with a fixed salary. Crown now says Packer won’t become an exec and won’t be paid a salary.
Crown says it has reached a deal with Packer’s Consolidated Press Holdings (CPH) Group under which it can request services be provided by key CPH execs, for which they will be paid pre-agreed hourly rates. But Packer and current Crown chairman Robert Rankin will be required to provide these services gratis.
Crown said the proposed changes address what the company claims was “a material undervaluation” of its assets. In particular, Crown believes that the market has unfairly pinned Crown’s value to MCE’s performance in Macau, where the market has undergone two straight years of monthly revenue declines. Last month, Crown sold off an $800 piece of its MCE stake.
