Packer steps out of the shadows to put his Crown stake on the block

James Packer’s announcement that he is open to offers for his 37 per cent stake in Crown is less of a statement and more of an understatement.

Coming as it does from the billionaire who has been trying for years to find an exit strategy, there will be few in the industry surprised by Packer’s latest proclamation. But for whatever reason the casino mogul has decided to advertise his intentions, just in case there was any doubt.

James Packer will have Ken Moelis rustling  up interest in Crown.
James Packer will have Ken Moelis rustling up interest in Crown. Credit:

In doing so Packer is also signalling that he would undertake an assessment of any offer for Crown independently of the views of the Crown board. It’s a position that makes more sense than his previous statement that he would be guided by the will of Crown’s executive chairman, Helen Coonan.

What is even more interesting about the statement from Packer’s private company, Consolidated Press Holdings (CPH), on Tuesday is his choice of advisor – Moelis Australia.

The Australian Moelis operative spearheading the advice team locally is its joint chief executive Chris Wyke – a deal maker widely considered as one of the sharpest intellects in the business. But Packer’s pick of Moelis is far more likely to have been about getting access to the company’s US founder Ken Moelis – who over the years has been a close and trusted confidant of Packer.

He advised the US casino giant Wynn on its offer for Crown a few years back so would be intimately familiar with the company.

Within US gaming circles, there are few major deals transacted in which Ken Moelis doesn’t play some kind of role. Thus he has taken on an unofficial title of the industry’s advisory king.

While Packer’s statement on Tuesday was made in response to the proposal from Blackstone a few weeks ago to buy Crown at $11.85 per share, it is more likely that CPH has hired the Moelis big guns to take a more active role in ferreting out other offers.

At this point the proposal from Blackstone is sufficiently vague and so highly conditional that it is almost incapable of being considered by the Crown board.

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Crown did little more than acknowledge its receipt when it landed on March 22 and it hasn’t even suggested it would grant Blackstone due diligence. The company has said nothing publicly about the offer price but is believed to view it as opportunistic and well shy of representing appropriate value.

Crown is under investigation for underpaying staff
Crown is under investigation for underpaying staffCredit:Jason South

It would be surprising if Packer didn’t share that view.

Having Ken Moelis scoping out the market, particularly in the US, makes plenty of sense given the most likely candidates for Packer’s stake in Crown would be US private equity players or large US casino operators.

Given the reluctance of Australian regulators to allow local casinos to cosy up to Asian junket operators, an Asian suitor would have difficulty getting an offer across the line.

Suitors that want to stitch up a deal with Crown will want to get a tick from the board but the future ownership of the company remains the domain of Packer.

Without an agreement to sell his 37 per cent stake there is no deal. And Packer understands only too well that to get an auction off the ground there needs to be more than one buyer in the room.

According to industry sources, Blackstone is not the only group sniffing around Crown. Indeed some of the cleverest financial engineers in the business are said to have been plying their trade to come up with financially exotic workarounds to deal with a potential 10 per cent cap on Crown’s ownership.

In the meantime the NSW casino regulator, ILGA, has been busy dealing with the Crown board – ticking off all of the need-to-be-fixed items that were identified by the Patrica Bergin-led inquiry into Crown.

On Tuesday ILGA signed off on former SkyCity Entertainment Group CEO Nigel Morrison’s suitability to join the board of Crown – in a record breaking time of nine weeks.

More importantly, the regulator is also coming to the final stretch of its negotiations with Packer around his role in Crown going forward.

As has been outlined in this column previously, it appears likely that Packer will be given a tick to retain his 37 per cent economic interest in the casino group – but restrictions will be placed on his voting rights.

Such an outcome will leave Packer free to sell his stake to any bidder (that receives regulatory approval to buy it) as long as the price is right.

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Source: Thanks smh.com