'UNDERVALUED' CROWN RESORTS SPLITS BUSINESSES

Written on the 15 June 2016

'UNDERVALUED' CROWN RESORTS SPLITS BUSINESSES

JAMES Packer's Crown Resorts (ASX:CWN) will divide its international assets and Australian casinos into separate investment vehicles to bolster the company's share price.

Crown will explore a potential IPO of its Australian hotels in a property trust, except Crown Towers Melbourne, with the company retaining a 51 per cent interest.

The demerger will combine the company's casino hotels in Melbourne and Perth, proposed Sydney project, Crown Aspinalls in London and the online wagering business.

The new international listed company will comprise Crown Resort's 27.4 per cent interest in Melco Crown Entertainment (MCE) in Asia, Alon hotel and casino development in Las Vegas, 20 per cent stake in restaurant chain Nobu, 50 per cent holding in casino operator Aspers in the UK and investment in Caesars Growth Partners.

Crown raised US$800 million last month after reducing its shareholding in Melco Crown, which operates three casinos in Macau and one in the Philippines.

Crown Resorts chairman Robert Rankin says the initiatives have been designed to maximise shareholder value and streamline the company's ownership structure.

"The board has for some time been looking to address what we believe to be a material undervaluation by the market of Crown Resorts' assets, due to a traditional consolidated or amalgamated structure," Rankin says.

"In particular, we believe that Crown Resorts' extremely high quality Australian resorts are not being fully valued and the Crown Resorts share price has been highly correlated to the performance of its investment in Macau.

"The proposed demerger reflects the different nature of Crown Resorts' controlled Australian operating assets from its international investments. It will provide investors with greater investment choice and transparency on the underlying quality of all of Crown Resorts' assets."

Crown also announced it has adopted a new dividend policy to pay 100 per cent of normalised net profit after tax, which will apply to the final dividend for FY16 in October.

"Crown Resorts' revised dividend policy is expected to provide increased cash returns to our shareholders and reflects the strong earnings and cash flow generating capacity of Crown Resorts' business and the company's conservative balance sheet gearing following the sale of part of its MCE shareholding," Rankin says.

The company invested $752 million into MCE and has received cash returns totalling $1.4 billion, including the reduction of its shareholding and $327 million in dividends. Based on the current MCE share price, Crown's investment is valued at $2.7 billion.

Packer will no longer be employed as a senior executive following his resignation as chairman last August, but will continue as deputy chairman of MCE.

Following the demerger, Rankin will be chairman of both companies.

 


Latest News

VILLAGE ROADSHOW PARKS HURT BY DREAMWORLD TRAGEDY

QUEENSLAND visitors to Village Roadshow (ASX: VRL) theme parks have declined 12 per cent in the wake of four deaths a...

ASF UNVEILS TRAFFIC PLANS FOR THE SPIT

A SECOND bridge over the Nerang River is the centrepiece of the ASF Consortium's plan to improve traffic flow ...

BHP AND VALE EDGE CLOSER TO $47.5 BILLION SAMARCO DAM DISASTER SETTLEMENT

BHP Billiton (ASX: BHP) and Brazilian mining company Vale have entered into a preliminary agreement with Brazilian fe...

BLK SPORT FOUNDER TYRON BRANT REMAINS CEO UNDER NEW OWNERS

BLK Sport has been purchased from receivers McGrathNicol by a private consortium composed of a TimorLeste-based oi...

Related News

CARSALES CEO RETIRES AS NEW COMPETITOR COX FINALISES MERGER

CARSALES will have a new CEO as it takes on a fresh challenger to its crown as the dominant online car sales portal i...

BUSINESS CONFIDENCE AT A SIX-YEAR HIGH

SMALL and medium businesses have entered 2017 with their confidence at a six-year high, building on strong gains m...

CONSUMERS PESSIMISTIC ENTERING 2017

CONSUMER confidence remains at its weakest point since April 2016, according to the latest Westpac Melbourne Institut...

RISE OF STARTUP SUPPORT PROGRAMS NOT AS ROSY AT IT SEEMS

ENTREPRENEURIAL cultivation companies in Australia are appearing quickly, but questions have been raised about whe...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter