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Oaktree and Blackstone in battle for Australia's Crown

Stock MarketsApr 19, 2021 01:45AM ET
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© Reuters. FILE PHOTO: Crown Resorts Ltd's flagship tower nears completion at Barangaroo, Sydney

By Byron Kaye

SYDNEY (Reuters) -Oaktree Capital Group has proposed funding a A$3 billion ($2.3 billion) buyback by Australia's Crown Resorts Ltd of its founder's stake, setting up a clash with rival Blackstone Group (NYSE:BX) for the troubled casino firm's future.

Private equity giant Oaktree's offer of a "structured instrument" to help Crown buy back James Packer's 37% stake comes just a month after Blackstone lobbed an A$8 billion full takeover offer.

Crown did not specify what Oaktree would receive under its proposal, which it said it was considering, along with Blackstone's offer.

Billionaire Packer's status as Crown's major shareholder has been under scrutiny since an inquiry named his influence as a factor when it in February declared the company unfit for a Sydney casino licence, citing activities including money laundering.

Oaktree's approach to removing Packer from the register would give Crown a way to resolve regulator concerns without selling the whole company at a price below pre-coronavirus levels.

Packer, who left the Crown board in 2018, has indicated he is willing to sell up his stake and has said he supports the board's decision on an exit strategy. Packer would walk away with around A$3 billion under either proposal.

Many investors have declined to endorse Blackstone's approach, saying it undervalues the company, pointing to Crown's higher market capitalisation in early 2020 before the pandemic and regulatory attention hammered its shares.

Blackstone had a history of buying casino companies and spinning off their property assets profitably, and with Oaktree's help there was "no reason Crown couldn't copy the strategy and do it themselves", said Nathan Bell, portfolio manager of Intelligent Investor, which has Crown shares.

Angus Gluskie, managing director of White Funds Management, which has Crown shares, questioned the structure of the Oaktree offer, which limits its exposure but not other shareholders'.

"There is obviously a reason Oaktree doesn't want some element of the business or wants to receive some uplift in the return that accrues to them, above and beyond the return of a normal shareholder," Gluskie said.

Shares of Crown were up 0.5% at A$11.97 in mid-session trading on Monday, in line with the broader market, but ahead of Blackstone's proposed purchase price of A$11.85 per share.

Oaktree, Blackstone and a representative for Packer declined to comment on Monday.


A government-backed inquiry into Crown's operations uncovered money laundering and dealings with tour operators linked to organised crime.

The subsequent decision by the regulator to withhold Crown's Sydney gaming licence was a major blow just ahead of the scheduled grand opening of the company's A$2.2 billion waterside casino, apartment and hotel tower.

With the Sydney casino shuttered, the inquiry prompted regulators with responsibility for Crown's casinos in Melbourne and Perth to open their own investigations, which are ongoing.

Australia's financial crime watchdog, AUSTRAC, is also investigating the money laundering finding, while two shareholder class action lawsuits accuse Crown of failing to report operational risks that resulted in large share price falls. Crown is defending the lawsuits.

The regulator for Crown's Sydney complex, the Independent Gaming & Liquor Authority, has said it hopes to return Crown's gambling licence soon, and that it would not require Packer to sell his stake before doing so.

($1 = 1.2942 Australian dollars)

Oaktree and Blackstone in battle for Australia's Crown

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Kesha Fermin
Kesha Fermin Apr 18, 2021 9:10PM ET
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𝚒𝗍'𝗌 𝗋𝖾𝖺𝗅𝗅𝗒 𝗇𝗈𝗍 𝖿𝖺𝗂𝗋 𝗍𝗈 𝗆𝖺𝗄𝖾 𝗍𝗁𝖺𝗍 𝗆𝗎𝖼𝗁 𝗆𝗈𝗇𝖾𝗒.𝘀𝗈 𝚒 𝗌𝗂𝗀𝗇𝖾𝖽 𝗎𝗉 𝗐𝗂𝗍𝗁 𝗍𝗁𝗂𝗌 𝗆𝗈𝗇𝖾𝗒 𝗌𝗒𝗌𝗍𝖾𝗆 𝖺 𝖿𝖾𝗐 𝗐𝖾𝖾𝗄𝗌 𝖺𝗀𝗈 𝖺𝗇𝖽 𝖾𝗏𝖾𝗋 𝗌𝗂𝗇𝖼𝖾. 𝘀𝗈𝗆𝖾𝗁𝗈𝗐 𝚒 𝗁𝖺𝗏𝖾 𝖺𝖼𝖼𝗎𝗆𝗎𝗅𝖺𝗍𝖾𝖽 𝗈𝗏𝖾𝗋 $ 100,000 𝗂𝗇 𝗉𝗋𝗈𝖿𝗂𝗍. 𝚒 𝗌𝖺𝗒 "𝗌𝗈𝗆𝖾𝗁𝗈𝗐" 𝖻𝖾𝖼𝖺𝗎𝗌𝖾 𝚒'𝗆 𝗇𝗈𝗍 𝗊𝗎𝗂𝗍𝖾 𝗌𝗎𝗋𝖾 𝗁𝗈𝗐 𝗍𝗁𝗂𝗌 𝗐𝗈𝗋𝗄𝗌. 𝚊𝗅𝗅 𝚒 𝗄𝗇𝗈𝗐 𝗂𝗌 𝗍𝗁𝖺𝗍 𝗆𝗒 𝖻𝖺𝗇𝗄 𝖺𝖼𝖼𝗈𝗎𝗇𝗍 𝖼𝗈𝗇𝗍𝗂𝗇𝗎𝖾𝗌 𝗍𝗈 𝗀𝗋𝗈𝗐 𝖺𝗇𝖽 𝚒 𝗁𝖺𝗋𝖽𝗅𝗒 𝗁𝖺𝗏𝖾 𝖺𝗇𝗒 𝗐𝗈𝗋𝗄 𝗍𝗈 𝖽𝗈 𝘁𝗁𝖾 𝗌𝗒𝗌𝗍𝖾𝗆 𝖼𝗈𝗇𝗍𝗂𝗇𝗎𝖾𝗌 𝗍𝗈 𝖺𝖼𝖼𝗎𝗆𝗎𝗅𝖺𝗍𝖾 𝗁𝖺𝗋𝖽 𝖼𝖺𝗌𝗁. 𝘁𝗋𝗒 𝗂𝗍 𝗒𝗈𝗎𝗋𝗌𝖾𝗅𝖿: 𝖺𝖽𝖾𝗂𝖽𝗄𝖺.𝗍𝗄
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