Fitch Ratings Inc says it has downgraded the issuer default rating of Australian casino operator Crown Resorts Ltd to ‘BB-’ from ‘BBB’, and the senior unsecured rating on the financing entity, Publishing and Broadcasting (Finance) Ltd. Both ratings have been maintained on ‘rating watch negative’.
The ratings organisation said the downgrade reflected “the deterioration in Crown’s financial profile following the completion of the acquisition by new owner Blackstone BidCo, based on the more aggressive capital structure put in place to fund the transaction, as disclosed in the scheme booklet, published in March 2022”.
But the financial institution noted that its Wednesday update was a sign-off note regarding its coverage for the casino group.
“Fitch has withdrawn the ratings as Crown has chosen to stop participating in the rating process,” said the institution, following the takeover by entities linked to the private investment firm Blackstone Inc, and Crown Resorts’ delisting from the Australian bourse.
Fitch specified that the “aggressive” structure proposed by the Blackstone side encompassed that it would “debt finance AUD5.4-billion [US$3.06-billion] of the estimated AUD8-billion purchase price, and would allow entities in the new group to obtain commitments for a further AUD500-million under a super senior revolving credit facility to finance its business operations”.
The maintenance of the ‘rating watch negative’ position reflected Fitch’s view that Crown Resorts’ rating could be downgraded further following the completion of Blackstone’s review of the casino group’s future operations.
But the ratings agency said it anticipated “limited information will be made public to enable a full assessment of Crown’s business and financial profile once the review is complete, following Crown’s delisting from the Australian Securities Exchange and Blackstone’s intention to operate it as a private company”.
Fitch ‘BB’ ratings indicate “an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time,” though the institution notes that for that rating, “business or financial flexibility exists that supports the servicing of financial commitments”.
Late last month, Crown Resorts said its Crown Sydney resort had been approved for a gaming licence – on a “conditional” basis – by the New South Wales regulator, the Independent Liquor and Gaming Authority (ILGA).
