Crown faces financial limbo ahead of October licensing decision


Analysts concede that if Crown were found irrevocably unfit to be licensed in Melbourne, it would likely have a domino effect on its ability to run casinos in Sydney and Perth.

Influential Crown shareholder Rob Luciano, fund manager at VGI Partners, said the company should be allowed to keep its license, but it needs to clean up its deed. “Bad actors in the Crown – be it the board of directors and senior management – should be punished. But common stock holders, staff and customers shouldn’t do it, ”he said.

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Until a decision is made in Victoria, Crown remains in limbo. It would be nearly impossible for the company to raise funds from investors as its largest shareholder, Mr Packer, is trying to sell.

The uncertainty also casts a cloud over two competing takeover bids for the company. Rival Sydney casino Star Entertainment and private equity giant Blackstone both made conditional takeover proposals to Crown ahead of the royal commission.

Crown shares fell 1.5% on Wednesday to close at $ 10.31 as investors digested the damning recommendations of the royal commission. About $ 2 billion has been wiped out of Crown’s market value since the royal commission began in May.

The royal commission uncovered a series of damaging revelations about the company, including widespread violations of responsible gambling laws and the underpayment of up to $ 480 million in state taxes.

Billionaire James Packer is Crown’s largest shareholder with a 37% stake. Ms Coonan said this week that she would speed up exit plans by October. The company appointed a new chief executive, former LendLease boss Steve McCann, in May.

Gaming analysts have started to revise their valuations and profit models for the company to take into account the possibility that Mr. Packer’s Crown will be found unfit to hold a casino license in Victoria.

There is some haircut for the inherent uncertainty in Crown’s share price – which at $ 10.40 is well below the $ 13 Mr. Packer sold a 10% stake to a few years ago.

But the surrender does not reflect the revocation of the license in Victoria, nor the risk that other states will follow suit.

Goldman Sachs analysts named Crown their least-favored casino stock due to uncertainty surrounding its Sydney license, ongoing regulatory investigations by the Victorian regulator and AUSTRAC, and the high compliance costs of remediation.

But an analyst, who preferred to remain anonymous, noted that no new investor was avoiding the action and that a mass of existing institutional shareholders remained optimistic.

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