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May 10, 2017

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Crown sells stake, exits Macau

AUSTRALIA’S Crown Resorts Ltd quit its remaining stake in Macau-focused Melco Resorts and Entertainment Ltd for US$1.16 billion, ending a fraught offshore expansion and freeing up cash for new projects at home.

James Packer’s company will exit its holding in Melco Resorts by offloading a final 11.2 percent holding to joint-venture partner Melco International next Monday, the Australian-listed firm said.

Its final exit from the one-third stake it held in Melco a year ago allowed Crown, which late last year also shelved plans for a Las Vegas casino, to focus on new projects in Sydney and Perth.

Crown has suffered from weakening demand in Macau following a Chinese corruption crackdown.

Crown has booked a loss on joint ventures including Melco every year since 2010, according to Thomson Reuters data.

The casino operator had 18 staff members detained in China last year accused of organizing banned gambling activities overseas for wealthy Chinese.

Melco said in a statement that it would buy the Crown shares for US$1.16 billion.

In a statement to the stock exchange, Crown said it would use the sale proceeds — totaling US$987 million after unwinding equity swaps associated with the joint venture — to cut debt.

“I don’t think there’s an urgency in terms of cutting down their debt ratios, but they do have some pretty significant capex in the pipeline, particularly with Crown Sydney,” said Vicky Melbourne, a senior director at Fitch Australia, which has Crown with a “BBB” credit rating with a stable outlook.

Crown’s departure from Macau comes after gambling revenues in the southern Chinese city grew in the first half of fiscal 2017, reversing three years of declines.

Visitor numbers are up as new resorts helped draw high rollers and casual gamblers to China’s only legal casino hub.


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