Crown Resorts Offered Funding for Share Buy-Back Program
The Australian integrated resort operator Crown Resorts (ASX: CWN) has received a proposal from the alternative investment management firm Oaktree Capital Management (NYSE: OAK-A) to provide up to AUS$3 billion (€1.94 billion) in funding for a share buy-back program.
According to Crown, if accepted, the funds will be used to purchase some or all of its shares from the investment holding business Consolidated Press Holdings (CPH), which currently owns roughly 37% of the operator’s shares.
However, Crown added that the proposal is unsolicited, preliminary, non-binding and indicative, and that it is subject to shareholder proposal. Furthermore, no votes need to be cast in favor by CPH or its associates.
The company said that it is yet to form an opinion on the proposal and that its board will now begin assessing the offer. Therefore, it is far from certain that it will be accepted.
The offer has come at a time when private equity giant Blackstone (NYSE: BX) is attempting to takeover Crown. In March, Blackstone offered AUS$8.02 billion to purchase the remaining 90.1% of shares in Crown; it purchased the remaining 9.99% in April 2020. However, last week it was announced that Blackstone has altered its offer so that it will not go ahead if any of Crown’s existing licenses are suspended or if it does not receive its New South Wales license.
Under the terms of the new offer, if Crown’s licenses in New South Wales, Victoria or Western Australia are suspended or revoked then the deal will be cancelled. A recent inquiry into crown in New South Wales found that it was “unsuitable” to run a casino in the Barangaroo district of Sydney; however, it may receive a license if it undergoes some changes. That inquiry then prompted additional inquiries in Victoria and Western Australia.
Blackstone is also able to withdraw its bid if “any of the gaming regulatory authorities imposes terms or conditions on Crown or any of its current or foreshadowed casino licenses or framework agreements which, when combined, constitute a material adverse change” to Crown’s business.
However, should none of these things happen, it is expected that the acquisition will be completed in the third quarter of this year.