Selling its 9.99% share
Melco Resorts and Entertainment has sold its 9.99% stake in the Australian casino company Crown Resorts. The purchaser of the shares is The Blackstone Group, an asset management company in the United States.
a 37.3% loss on the acquisition price Melco paid in May 2019
The transaction was filed on Wednesday through the Australian Securities Exchange. The deal sees 67,675,000 Crown Resorts shares being sold for AU$8.15 (US$5.32) per share. In total, the deal is worth AU$551.6m (US$360m), registering a 37.3% loss on the acquisition price Melco paid in May 2019.
Melco Resorts warned recently that it may need to sell its stake in Crown Resorts due to it being a “potential source of liquidity”.
Origins of the deal
Melco Resorts initially paid AU$13 ($8.49) per share in May after buying the position from CPH Crown Holdings. The company is under the control of Australian billionaire and majority owner of Crown Resorts, James Packer. The initial investment by Melco Resorts totaled almost AU$880m (US$574m).?
originally planning to increase its Crown Resorts stake to 19.99%
Melco was originally planning to increase its Crown Resorts stake to 19.99% through a second investment. However, it did a U-turn on this strategy in February in the wake of the coronavirus pandemic, before announcing its decision to sell the 9.99% stake it had in the company.
Facing uncertain times
As well as the ongoing Barangaroo inquiry, Crown Resorts is dealing with the fallout from casino closures amid the ongoing lockdown. It owns a number of major properties in Australia, all of which have remained shut since March 23.?
As a result of the closures, Crown Resorts was forced to furlough about 11,500 of its workers. To date, Australia has seen over 6,700 confirmed cases of the coronavirus, with 88 deaths so far.
Melco Resorts has casino investments in Macau, the Philippines, and Cyprus. With most of its operations in the badly hit Asia region, the company says the pandemic has had a material effect on its financial condition and future prospects. Analysts believe that casino revenues in Macau are unlikely to get back to pre-coronavirus levels until 2022.