Small gamble

15 December 2016 By Pete Sweeney Follow @petesweeneypro

James Packer’s Australian casino giant gave up plans to spin off its share in Macau-focused Melco Crown. Instead, it is selling half the stake to partner Lawrence Ho for $1.2 bln. Plan A would have been better but Crown Resorts needs to distance itself from Chinese gambling fast.

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Australian casino company Crown Resorts said on Dec. 15 first-half revenue would fall 12 percent due to a slump in turnover from VIP gamblers, and announced plans to raise A$1.6 billion ($1.2 billion) by selling shares in New York-listed Melco Crown Entertainment.

Crown also said it was cancelling a planned demerger of its international assets, although it will still spin off a 49 percent share in some Australian hotels.

Crown will use the proceeds to cut debt by about A$800 million, give shareholders a special distribution of A$500 million and spend A$300 million on share buybacks.

The decision comes in the wake of increasing Chinese pressure on capital outflows as the yuan falls against the dollar. This could impact Chinese tourism spending in Macau, where Melco operates three casinos.

Chinese police detained several Crown employees in October, three of whom are Australian nationals, including its head of international VIP gambling, for suspected "gambling crimes."

In October, Crown said "less than half" its international VIP revenue, or about 12 percent of total revenue, came from Chinese high-rollers.

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