Crown Resorts Inquiry Alleges James Packer Sold Stake with Inside Information
Posted on: September 25, 2020, 09:50h.
Last updated on: September 25, 2020, 12:38h.
The inquiry into Crown Resorts’ suitability to hold a casino license in New South Wales (NSW) has allegedly uncovered information into the dealings of its founder.
Billionaire James Packer, who founded the Australian casino empire in 2007, was allegedly privy to secret financial forecasts regarding the company’s outlook before he decided to sell nearly 20 percent of his stake.
Citing health reasons, the 53-year-old stepped down from the Crown board in May of 2019. That same month, Packer reached a deal to sell 19.9 percent of his Crown ownership to Melco Resorts in a deal that was valued at $1.76 billion.
The NSW inquiry this week exposed allegations that Packer had inside information on Crown’s financial position when he opted to sell to Melco.
During hearings this week, Crown officials said Packer emailed CEO Ken Barton on May 3, 2019, and “urgently” requested financial forecasts for the company through 2022. Barton told the NSW inquiry that Michael Johnston, finance director of Crown Resorts, delivered Packer the projections two days later.
The NSW Independent Liquor and Gaming Authority (ILGA) established an inquiry into Crown Resorts. The goal was to investigate whether the Australian casino operator’s alleged exposure to organized crime and vulnerability to money laundering should disqualify the company from doing business in the southeastern Australian state.
COVID-19 suspended the hearings in April, but the probe resumed last month.
Packer’s deal with Melco Resorts was halted after the first 9.99 percent was transacted. In February, Melco founder and CEO Lawrence Ho blamed the coronavirus for his decision to fold on the second batch of Crown shares.
As a result, Packer remains the Crown’s largest individual shareholder. The Aussie businessman retains a 36 percent ownership position in the company.
Melco later sold its 9.9 percent of Crown to Blackstone Group at a deep discount, 37.3 percent less than what Melco paid for the shares.
Crown Resorts officials told the NSW panel that the company was unaware of Packer’s decision to sell nearly 20 percent of his ownership to Melco until the night before the deal was announced.
Inquiry member Patricia Bergin SC, a former NSW supreme court judge, said Packer’s effort to quickly unload shares to Melco might have violated the state’s Casino Control Act. Under NSW’s 1992 commercial gambling law, the state is to be informed regarding large transactions of ownerships in licensed casino operators.
Crown is nearing completion of Crown Sydney, a $2 billion integrated casino resort in Barangaroo. With 75 floors, the hotel and residence tower is the tallest structure in Sydney. The casino will open with only VIP members being granted access.
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