Australian casino developer Crown Resorts Ltd is disposing of its remaining stake in Melco Resorts and Entertainment Ltd. The announcement was made on Monday by the latter firm, which owns and operates casino properties in Macau and in the Philippines.
Melco Resorts will repurchase Crown Resorts’ remaining shareholding in the firm, using the proceeds from an offering of American depository shares and ordinary shares also announced on Monday and backed by several investment banks. “Upon completion of this offering and repurchase, which is expected to occur on May 15, 2017, Crown Resorts will no longer hold any shares in Melco Resorts,” the announcement said.
It added: “The offering will not have a dilutive effect on the company’s shareholding, and the shareholding of our majority shareholder, Melco International Development Ltd, will remain at 51.2 percent.”
Nasdaq-listed Melco Resorts was originally established in 2004 as a joint venture between Hong Kong-listed Melco International and a firm that eventually became Crown Resorts. The venture’s name changed from its former moniker Melco Crown Entertainment Ltd last April, following a series of sell downs by Crown Resorts.
At the start of May 2016, Crown Resorts – alongside Melco International, controlled by casino entrepreneur Lawrence Ho Yau Lung (pictured, left) – each held a stake of 34.3 percent in the joint venture. But in early May 2016, Crown Resorts, controlled by James Packer (pictured, right), said it was cutting its holding in the firm to 27.4 percent. Further sell downs by Crown Resorts occurred in December, ultimately reducing its holding to 11.2 percent.
Solo Japan bid
In Monday’s announcement, Melco Resorts said an existing agreement between Melco International and Crown Resorts for the establishment of a joint venture to bid for a casino licence in Japan, would also be terminated.
Melco Resorts’ chairman Mr Ho said in a statement included in the release: “Despite our positive history with Crown Resorts, I made the strategic decision to terminate the joint venture arrangement and allow Melco Resorts to pursue Japan alone.”
Mr Ho had indicated at the CLSA Japan Forum 2017, an investor conference held in Tokyo in February, that the firm would “spend whatever we need to win” a casino licence in Japan.
Legislation making casino gambling legal in Japan came officially into effect on December 26. In April, the Japanese government began work on the second – regulatory – piece of legislation related to casino gaming in the country. The draft statute – referred to as the implementation bill – will detail the specifics for the casino industry in Japan: how casinos are administered and regulated; the taxation regime to be applied to them; their location; and the number of licences to be issued.
In his Monday comments, Mr Ho said he was “extremely excited” about Melco Resorts’ future. “I firmly believe that Macau remains the best gaming market in the world and a great place to invest,” he added.
Crown Resorts’ sole remaining nominee director in Melco Resorts, Robert Rankin, is also to resign as a non-executive director of the Asian firm as Crown Resorts fully liquidates its stake in the firm.
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