James Packer, already the largest shareholder in Australian casino operator Crown Resorts Ltd, has increased his holding by 3 percentage points, the firm confirmed in a filing to the Australian Securities Exchange (ASX) on Wednesday.
His ownership of ordinary shares increased by nearly 21.9 million units, to above 386 million shares, increasing his voting rights to 53.01 percent from 50.01 percent previously. The strike reference price per share for the transaction was approximately AUD11.94 (US$8.43).
Mr Packer (pictured) – who stepped down in August as chairman of the firm and is now an executive director – is according to Australian media making use of ASX rules that allow investors to accumulate an additional 3 percent in a company every six months.
The strike price was at a slight premium to Tuesday’s market close of AUD11.66, but well below the 52-week high of AUD16.12.
Crown Resorts has seen its share price under some downward pressure this year. A number of investment analysts have attributed that to reduced earnings in Macau from its Asian casino venture with Hong Kong-listed Melco International Development Ltd.
On November 5 that collaboration – Melco Crown Entertainment Ltd – reported revenue of US$945.7 million for the three months to September 30, down 16 percent from the prior-year period. As of August, Crown Resorts owned a 34.3-percent stake in Melco Crown.
A note from Deutsche Bank Securities Inc indicated that unofficial industry data from the first five days of operation for the Melco Crown majority-owned Studio City resort on Cotai in Macau – which opened on October 27 – suggested the property was initially underperforming the market relative to its government allocation of new-to-market tables and relative to the extra hotel rooms it was bringing to the local market.
Separately, a number of investment analysts have recently commented on the level of leveraging at Crown Resorts.
JP Morgan Securities Australia Ltd referred in a note late last month to the Crown Resorts’ balance sheet as being “full”, and said a proposed Las Vegas scheme from Crown Resorts would in likelihood require AUD1 billion in equity from the company, while new construction in Melbourne would require AUD500 million from the casino operator. JP Morgan added that Crown Sydney at Barangaroo was a AUD2-billion development, with all debt on the firm’s balance sheet.
On October 29, Moody’s Investor Service Inc said the acquisition by Crown Resorts – for US$100 million – of a stake in international restaurant and hotel company Nobu Hospitality LLC was “credit negative”.
The credit rating agency however said the deal would have “no immediate impact” on the rating of Crown Resorts. The Australian gaming operator has a Moody’s issuer rating of Baa2, with a stable outlook.
