GGRAsia – Crown Resorts defending Crown Sydney challenge

Crown Resorts defending Crown Sydney challenge

Aug 03, 2016 Newsdesk Latest News, Top of the deck, World

Australia-based gaming operator Crown Resorts Ltd says it will “defend vigorously” a legal challenge to planning permission for its Crown Sydney casino resort (pictured in a rendering), in Australia’s largest city, Sydney.

Crown Resorts announced in late July that the state of New South Wales (NSW) had in June given conditional planning consent for Crown Sydney, a project that has been described in media reports as a AUD2-billion (US$1.5-billion) venture.

Papers challenging the validity of the decision have been served on Crown Resorts by Millers Point Fund Inc, said a filing on Tuesday by Crown Resorts to the Australian Securities Exchange.

The application also challenges the decision of the NSW Planning Assessment Commission to approve modifications to the approved concept plan for redevelopment of Barangaroo, an inner city harbourside district in Sydney where Crown Sydney will be located. The casino resort itself was referred to in Crown Resorts’ own filing as “Crown Sydney Hotel Resort”.

Millers Point Fund is described by the Daily Telegraph newspaper in Sydney as “a protest group”.

According to Crown Resorts’ filing, the legal proceedings name as respondents: the state’s Minister for Planning (currently Rob Stokes); the Barangaroo Delivery Authority; the Sydney Harbour Foreshore Authority; Lendlease (Millers Point) Pty Ltd; and Crown Sydney Property Pty Ltd.

“Crown will defend these proceedings vigorously,” said the filing.

The first date for legal proceedings via the Land and Environment Court of NSW is August 26, according to Crown Resorts’ filing.

The NSW Department of Planning and Environment’s assessment report on the scheme confirms the project as having a 6,085-square-metre (65,498-sq foot) gaming facility; and a 71 storey-tower with podium and three basement levels, providing a gross floor area of 77,500 sq metres, including a 350-room hotel and 66 residential apartments.

Valuation report

Separately, a report on Friday from brokerage Macquarie Securities (Australia) Ltd said plans by Crown Resorts – announced in June – to split its overseas business interests from its domestic ones, could be worth an additional AUD0.74 per share to the valuation of a notional international unit.

The institution added that spinning Crown Resorts’ Australian hotels – excluding Crown Towers Melbourne – into a property trust “could add a further AUD1.43 to Crown Resorts’ valuation”.

According to a filing on June 15, Crown Resorts is to reduce to 27.4 percent its interest in Asian casino developer Melco Crown Entertainment Ltd, having announced the move earlier this year. Melco Crown – a venture with Hong Kong-listed Melco International Development Ltd – has much of its infrastructure investment in the Macau market.

Macquarie stated on Friday: “We analyse the potential value creation from the Crown [Resorts] de-merger based on spinning off Crown’s international assets into a separate listed entity.”

The institution added, referring to a casino project known as Alon that James Packer, a major Crown Resorts shareholder, has been pursuing in Las Vegas: “While near-term Crown earnings take a hit from the absence of Melco Crown as associate income, the corresponding positive from a valuation perspective is the removal of Alon capex [capital expenditure], which we estimate to be approximately AUD2.5 billion over the next four years (Crown’s share AUD1.6 billion) and which is IRR [internal rate of return] dilutive to Crown with an IRR of approximately 11 percent.”

The Australian Financial Review newspaper reported on Tuesday, citing the Macquarie analysis, that a demerger of Crown Resorts’ international and domestic operations – plus the creation of a property trust for the group’s Australian hotels except for Melbourne’s Crown Towers – could prove to be worth as much as AUD1.1 billion to Mr Packer personally, based on Crown Resorts’ stock price on Monday.