Billionaire Ho Sells Crown Stake as Virus Smashes Macao

Macao billionaire Lawrence Ho has given up any hope of building a foothold in Australia’s casino sector, selling his 10% stake in Crown Resorts to investment giant Blackstone for A$552 million ($375 million).

The transaction, which was revealed by The Australian Financial Review’s Street Talk column on Wednesday and confirmed by Crown, was completed at A$8.15 a share.

Ho’s Melco Resorts originally purchased its stake in Crown from James Packer’s Consolidated Holdings in May 2019 at A$13 a share.

But in February, Melco abandoned plans to buy a further 10% stake from Packer after the coronavirus forced the shutdown of all 41 casinos in the Chinese special administrative region.

Melco operates two casinos in Macao. Most of the city’s casinos have now reopened, but the latest official figures showed gambling revenue in the city-state plunged a staggering 79.7% in March to $664 million as tourist numbers slumped. The Macao government has now cut its forecast for gambling revenue in calendar 2020 in half, to $16 billion.

Melco shares, which are listed in Hong Kong and New York, have plunged 34.4% since the start of the year. The group was carrying $3 billion of net debt as of Dec. 31, according to its latest financial statements.

Melco said in February that while it “believes Crown has world-class assets that are complementary to its global business, it is Melco’s belief that, at this time, its capital needs to be deployed on its core assets.”

The sale would appear to further dampen Packer’s hopes of reducing his stake in Crown to diversify his interests. Ho had originally said he was steadily increasing his stake in Crown and some analysts believed Melco might eventually make a full takeover offer.

Independent inquiry

But with the global casino sector in hibernation because of Covid-19, such a deal looks unlikely to eventuate any time soon.

Melco was also at the center of an New South Wales government independent inquiry into Crown and its broader business. Crown is in the final stages of completing its Sydney casino at Barangaroo, and the inquiry was to examine links between Ho and his father Stanley, who has been previously banned from owning casinos in New South Wales because of his alleged links to organized crime.

A company associated with Stanley Ho holds a stake in Melco. Stanley Ho has long denied the allegations against him, and Lawrence Ho has stressed his independence from his father.

The New South Wales inquiry was indefinitely deferred in April because of the Covid-19 pandemic. Whether inquiry head Senior Counsel Patricia Bergin may need to change the scope of the inquiry to reflect Melco’s exit from Australia remains to be seen.

Blackstone’s purchase was led by its head of real estate acquisitions for Asia, Alan Miyasaki.

Crown’s new debt facilities will ensure the casino giant can survive the coronavirus shutdown and complete its new Sydney casino on schedule.

The U.S.-based firm, which manages $538 billion declined to comment further on the deal.

But market sources suggest it had been attracted to Crown’s portfolio of unique property assets and market positioning in Australia, where it is the monopoly player in Melbourne and Perth. In December, it will open its new casino in the heart of Sydney.

This story was originally published by the Australian Financial Review

Contact editor Yang Ge (geyang@caixin.com)