The AU$80 million (US$57.5 million) fine imposed on Crown Melbourne this week by the Victorian Gambling and Casino Control Commission (VGCCC) will have minimal impact on the company’s financial profile, says ratings agency Fitch.
As reported by Inside Asian Gaming, Victoria’s new casino regulator hit Crown with the record fine for the illegal use of China UnionPay cards – a process uncovered during last year’s Royal Commission – which saw Crown Melbourne allow patrons to use credit or debit cards to access funds to gamble.
According to a Tuesday note from Fitch, the fine will increase Crown’s FFO (funds from operations) adjusted net leverage by 0.2x, to 0.4x on a post-pandemic basis, however this still falls well below the 3.0x level where the agency says it would consider taking negative rating action.
Fitch also believes the more significant risk to Crown’s financial profile is uncertainty over its long-term capital structure once the sale of its shares to US private equity giant The Blackstone Group is fully approved.
The agency has previously warned of a multi-notch downgrade of Crown should the casino operator complete the sale on the expectation that Blackstone will impose a far more aggressive structure with higher leverage than traditional operators given its history in the US gaming sector.
Discussing the potential impact of the fine on Crown’s Blackstone transaction, Fitch added, “The fine imposed on Crown is unlikely to affect the sale, as it is below the material adverse change clause in the scheme implementation deed.
“The deed sets a minimum diminution of Crown’s consolidated net assets of AU$750 million for certain items before it comes into effect.”
Crown recently received shareholder approval to complete the sale of 100% of its shares to Blackstone for AU$8.9 billion (US$6.5 billion) and is now waiting regulatory and final court approvals.
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