No milk in Macau - Packer sent packing
Billionaire James Packer's Crown Resorts has announced it will scrap its Alon project in Las Vegas and sell off a major stake in its Macau casino business amid a major crackdown on gambling and corruption in China.
Crown has also cancelled plans to spin off its international businesses.
The company will sell off almost half its stake in the underperforming Melco Crown Entertainment for $1.6 billion, using the proceeds to cut debt, pay a special dividend of $500 million, and enable a share buy-back of around $300 million.
The move came as Macau suffered from gaming revenue declines for the past two years.
Crown's share of Melco's annual net profit plummeted by two-thirds in 2016 to $43 million following a corruption crackdown by Chinese authorities.
In a statement to the stock exchange, Crown Resorts chairman Robert Rankin said the business decisions made were strategic and for the long-term.
"This transaction will enable investors and analysts to more easily evaluate the financial and operating performance of the company's high quality core Australian assets," Mr Rankin said.
In October, 18 Crown employees including three Australians were detained in Shanghai for violating strict gambling regulations, which prohibit the direct marketing of casinos to large groups in China.
Meanwhile, Crown said VIP program turnover at its Australian resorts was down by 45 per cent for the first half of the 2017 financial year compared to the same time a year ago, and total revenue had fallen by around 12 per cent.
Crown's shares remain in a trading halt until next Monday as it considers what to do with its remaining stake in Melco. It said it was looking at "potential options to monetise" part of the 14 per cent investment.
Goodbye, Las Vegas
Crown has also abandoned plans to build its Alon casino project in Las Vegas and may sell it, but the company still planned to float a 49 per cent stake in some of its Australian hotels into a real estate investment trust.
"I don't think there was really anyone out there who was enthusiastic about them going back in to Vegas and so pulling out is the smart thing to do," said Theo Mass, partner at Arnhem Investment Management, which owns Crown shares.
"The market is not convinced Crown would make a difference there."
In Australia, Crown owns casinos in Melbourne and Perth and is building a new casino and hotel complex at the Barangaroo project in Sydney. It also owns the Crown Aspinell's casino in London which targets high rollers.