Melco Resorts Pushing Ahead With Controversial Crown Stake Purchase
Australian authorities made serious allegations against Crown Resorts and former chairman James Packer’s share deal with Melco Resorts and launched an investigation in Crown Resorts. However, it is not stopping Melco Resorts from pushing forward with its plan to purchase another 10 percent stake in Crown Resorts.
This purchase was originally agreed upon in May 2018 for a 20 percent share sell-off, half of which has already been transferred. According to Melco, it is obliged to complete the remaining 10 percent of the sale under the contract. The fact that Crown Resorts is pushing forward with the sale is also a concern given the fact that it can impact its Barangaroo casino license.
Despite the fact that Australian authorities may prohibit Melco from owning the stock, the company is still pushing through with the deal as agreed. In hopes of forestalling any legal inquiry and in hopes of a positive outcome, Melco is cooperating with Australian authorities in the investigation.
Bloomberg Markets and Finance
Melco Resorts revealed that it notified each state-based gambling regulator of its plan to submit to probity review. This was on June 6, four business days after the announcement of the deal but before any regulator contacted it.
The problem is that the new scrutiny could still end up sabotaging the deal. Australia’s national integrity watchdog is already looking into whether federal officials were bribed or compromised in all their Crown Resorts dealings. Additionally, the revelation of another banned company being part of the deal increases the risk.
Records show that Great Respect Limited owns 20 per cent of Melco International, which is the holding company that has controlling stake in Melco Resorts. Great Respect is another company on the banned list that Crown Resorts was not supposed to have business dealings with.
Crown License Revocation – Last Resort
Crown shares have already taken a pummeling. Their value has dropped by ten percent since the revelations broke two and a half weeks ago. However, despite its troubles, gaming analysts state that Crown Resorts casino license is not under threat and it will only be revoked as a last resort.
Gaming experts in Australia point out that while casino operators are bound to face issues the usual response is for a stern warning or financial penalties. Thanks to the regulatory framework in Australia, license revocation is an extreme last resort because most issues are targeted at individuals instead of organizations. The individuals involved will just cut ties with the company which is the best way to address serious issues instead of canceling licenses.
David WalkerAuthor
David is our resident 'down under' contributor, letting us know what is going on in the southern hemisphere, he is also keen blackjack player
