Oaktree Talks With Crown End, Closing Billionaire Packer’s Exit

Angus Whitley

30 Aug 2021, 11:27 AM IST

(Bloomberg) -- Crown Resorts Ltd. said talks with Oaktree Capital Management LP over a A$3.1 billion ($2.3 billion) proposal to help Crown buy out major shareholder James Packer ended, closing an exit path for the billionaire.

The Australian casino operator said Monday it’s no longer in discussions with the U.S. investment manager, which had offered to lend Crown funds to buy shares from Packer. Oaktree could have ended up owning about 10% of Crown.

The failure of the talks clouds the future for Packer, who owns about 36% of Crown and has tried at least twice to sell up. The fate of Crown, which on Monday reported its first loss in more than a decade due to Covid-19 shutdowns, is now in the hands of regulatory probes. Potential deals between Crown and investors like Oaktree are also collapsing.

For more details on Crown’s earnings, click here

Star Entertainment Group Ltd. last month scrapped a proposed merger with Crown following allegations of tax evasion and weak money-laundering controls at Crown that were aired at a public investigation. Crown in May also rejected an A$8.4 billion takeover bid from Blackstone Group Inc.

The verdicts from probes into Crown’s Melbourne and Perth casinos are due by October and March, respectively. Both inquiries have the power to judge Crown unfit to hold its licenses.

In more bad news, Crown said Monday that separate investigations by Australia’s financial crimes regulator, Austrac, into the company’s Perth and Melbourne casinos are likely to lead to “significant” civil penalties.

While Crown said it’s impossible to reliably estimate the size of any penalty, it noted three previous civil proceedings by Austrac against other targets had led to court-ordered penalties of between A$45 million and A$1.3 billion. Crown said Austrac hasn’t informed Crown whether it will take any enforcement action.

In a further blow to Packer and other shareholders, Crown said Monday it won’t pay a dividend for the six months ending Dec. 31, 2021, or in the event a casino license suspension or cancellation triggers a financing review.