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Crown lands financing to close Cannery deal

Dec 9, 2008 5:05 PM
Staff & Wire Reports |

Crown Ltd., Australia’s biggest casino owner, last week announced it had raised A$1.6 billion (US$1 billion) in financing, which will be used to repay debt due in August 2010 and help close a deal to purchase Cannery Casino Resorts in Las Vegas.

The Australian stock market was encouraged by the action as Crown shares rose 10 percent to close at A$5, their biggest gain since the stock commenced trading a year ago. That was when Crown Chairman James Packer split his media and gambling assets into two companies.

The refinancing should clear the way for Crown to close the purchase of Cannery Casino Resorts, which Crown agreed to buy for $1.75 billion in December 2007. Crown won’t face another "major refinancing" until late calendar 2011, the company said.

Crown is scheduled to appear before the Nevada Gaming Control Board in early January regarding the purchase, and later before the Nevada Gaming Commission for a final review.

The company has net debt of A$180 million, after including $1.6 billion of cash being held on deposit pending settlement of the Cannery transaction.

Crown said it has worked with regulators in Nevada and Pennsylvania, where Cannery has gambling operations, to gain licensing approval for the purchase.

In addition to last week’s financing arrangements, Crown will have about $900 million of U.S. dollar-denominated debt with an average interest rate of 5.9 percent once it completes the Cannery purchase.

The Meadows Racino in Pittsburgh, which will contribute most of the earnings in the Cannery acquisition, has posted "double-digit" revenue growth while its Las Vegas properties continued to suffer from the economic downturn, Crown said.

Trading at Crown casinos in Melbourne and Perth has been "solid" with revenue rising 4 percent in the five months ended November.

The company reiterated plans to pay out all of its earnings for the year ending June 30 as dividends.