Crown Resorts results hit by regulatory costs; Oaktree deal falls through

Australian casino operator Crown Resorts (CWN.AX) reported an annual loss on Monday and said it was no longer in discussions with Oaktree Capital (OAK_pa.N) over the private equity firm’s proposal to buy out founder James Packer’s $2.3 billion stake.

The loss, which Crown had already flagged, and the failure of the Oaktree deal show the extent to which its future is being shaped by regulatory scrutiny as it struggles to rebuild its image amid multiple Royal Commission enquiries.

While Crown already lost the licence for its Sydney casino after an inquiry in February found it allowed money laundering on its premises for years, its properties in Perth and Melbourne are also under a regulatory cloud, compounding challenges for the company already hit by the coronavirus.

Oaktree declined to comment on the failed deal with Crown, while the casino operator did not offer a reason in its statement for the agreement to fall through.

Its net loss for the year to June was A$261.6 million ($191.3 million), compared with a A$79.5 million profit a year earlier, while its revenue slid by nearly a third.

Macquarie analysts said they expect the recent performance at Perth “to act as a precedent for when Crown Melbourne and Crown Sydney re-open.”

Crown, whose shares ended 0.1% lower, had in May rejected an all-cash $6.5 billion bid from investment giant Blackstone Inc (BX.N), and subsequently lost out on a A$9 billion offer from smaller rival Star Entertainment Group

Separately, the casino giant also said some of its lenders had agreed to extend maturity of few credit facilities, while one of its lenders also agreed to a new A$250 million debt facility.

Maadhavi Barber, an analyst at Moody’s Investors Service, called the results “credit negative”, but said Crown’s credit profile was supported by sufficient liquidity and the extension of near-term maturities.