Australia’s Crown Resorts has advised noteholders that it will not redeem AU$630 million (US$487 million) of subordinated notes at their scheduled first call date in July, opting instead to maintain capital due to the impacts of COVID-19 and ongoing regulatory inquiries.
The notes, originally issued in 2015 and due 2075, can be redeemed by Crown at any time from July 2021 onwards however the embattled casino giant told investors Monday that it has decided not to redeem this year and will instead review its capital structure in 12 months’ time, “at which point Crown expects to have improved certainty on its operational and regulatory position.”
Noteholders will continue to receive quarterly interest payments in the interim.
“Crown continues to find itself operating in an uncertain environment given the impact of the COVID-19 pandemic on Crown’s businesses and various regulatory investigations,” said Crown Executive Chairman Helen Coonan in a letter to noteholders.
“Since March 2020, Crown has been directed by relevant State and Federal Governments to suspend its gaming activities and other non-essential services for various periods of time. While Crown Melbourne and Crown Perth are currently trading, and Crown Sydney has commenced non-gaming operations, performance continues to be impacted by COVID-19 related operating restrictions, including capacity limits and physical distancing protocols, and short-term Government-mandated closures.
“Crown is also responding to a range of regulatory matters including the findings of the NSW Independent Liquor and Gaming Authority Inquiry, the Royal Commission into Crown Melbourne, the Western Australian Royal Commission and the enforcement investigation by AUSTRAC. Crown is fully cooperating in relation to these regulatory processes.
“At the same time, Crown is continuing to implement its Reform Agenda as we seek to restore public and regulatory confidence in our operations.
Crown has been considering options to ensure the group maintains a strong capital position throughout this period of uncertainty, while balancing the interests of Noteholders and other stakeholders.
“Having regard to the impact of the COVID-19 pandemic on Crown’s businesses and the various regulatory investigations, the Crown Board has decided not to redeem Notes II on the First Call Date.”
The decision to delay redemption of the notes comes as Crown ponders a series of acquisition and merger proposals.
American global asset management firm Oaktree Capital Management is looking to acquire the 36.8% stake in Crown owned by James Packer’s Consolidated Press Holdings, while local rival Star Entertainment Group has put forward a proposal for the two companies to merge.
An offer by The Blackstone Group, which currently holds a 9.99% interest in Crown, to acquire all shares has already been knocked back.
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