Crown Resorts shares will come under enormous pressure today after its future in the Australian gambling business was thrown into considerable doubt.
The shares closed at $10.15 on Monday – the company asked for a trading halt yesterday morning ahead of the release of the report from Commissioner Patricia (Paddy) Bergin.
The problems in NSW also relate to the company’s casinos in Melbourne (Crown) and Perth (Burswood).
The key regulator, the New South Wales Independent Liquor and Gaming Authority is die to hold a media conference today (Wednesday) to explain the possible future directions for Crown and its control and business model for the $2.2 billion Barangaroo building and its casino, which remains shut.
While Crown says it will work with the NSW regulators to sort out the future of its Barangaroo casino licence, it is now really looking at its entire future, an overhaul of its management and broad and the share register to reduce the influence of James Packer.
It says it is currently considering the report which was released yesterday – it will be a good read – 800 pages of damning indictments of Crown’s management and especially its boardroom processes that were found wanting to an incredible degree by Commissioner Patricia Bergin.
But THE issue for Crown and the government and the WA and Victorian governments and regulators – is what to do with Crown’s 36% shareholder, James Packer.
The Bergin inquiry report reveals that the company that Australia’s most high-profile businessman controls has been found unfit to hold a casino licence in NSW.
The future opening of Crown’s Sydney Barangaroo project now rests with the company’s ability to clean up its act.
Packer’s continued ownership of 36% of Crown Resorts is also under a cloud. It will now rest with a new regulator to decide whether he is able to hold any more than 10%.
In corporate cases where the future of a business is at issue and a big, tough-minded decision is needed, you always back self-interest. In this case the self-interested move would be to force packer to sell off his stake.
He has been trying to sell the stake without success. The proposed cap of 10% on shareholdings mean that Packer’s options for the sale are more limited.
But it could still see control of Crown change.
In the report Ms Bergin said that Crown is not a “suitable person” to hold its casino licence at Barangaroo – but she did hold out the possibility that it may be in the future.
“If Crown is to survive this turmoil and convert itself into a company that can be regarded as a suitable person and achieve the same for the Licensee, there is little doubt that it could achieve a fresh start and emerge a very much stronger and better organisation,” she wrote.
That’s a lifeline for the current board of Crown (shorn of its packer appointments and managers).
