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Aussie Billionaire James Packer’s Crown Secures Additional Debt Facility As Talks With Oaktree Ends

Crown Resorts said Monday it has secured a new debt facility as discussions ended with U.S. investment manager Oaktree Capital Management over a A$3.1 billion ($2.3 billion) proposal to help the casino operator buy out controlling shareholder James Packer.

“Crown is no longer in discussions with Oaktree,” the company said in a statement after announcing a net loss of A$261.6 million in the year ended June 30, reversing a profit of A$79.5 million the previous year amid pandemic-induced closures of its casinos. Oaktree had in June offered to lend Crown funds to buy shares from Packer.

Crown said it had recently reached an agreement with creditors to extend the maturity dates of some A$560 million in bilateral facilities to October 2023. The lenders also agreed to waive certain financial covenants until December 31, 2021.

As part of arrangement with its creditors, Crown said it has agreed not to declare an interim dividend for the first-half ended December 31. The company didn’t declare a final dividend for the year ended June 30. “Future dividends will be subject to the board’s assessment of Crown’s financial position.”

Crown said it had total liquidity of A$560.8 million as of June 30, comprising A$390.1 million in available cash and A$170.7 million in committed undrawn credit lines. In additional, the company has secured a new A$250 million debt facility, which should help cover certain circumstances such as redemption of Crown’s euro medium term notes.

Oaktree was the latest potential investor to walk away from Crown as the company faces tax evasion and money-laundering allegations in Australia. Last month, Star Entertainment Group scrapped a proposed merger with Crown.

“Issues raised at the Victoria’s Royal Commission into Crown Melbourne have the potential to materially impact the value of Crown, including whether it retains the license to operate its Melbourne casino or the conditions under which the license is retained,” Star said in a statement last month.

Losing the Melbourne casino license would be a major blow to Crown, which has already failed to get the permit to run its brand new casino in Sydney. Regulators have argued that Crown is unfit to run its Melbourne casino after the company failed to address money-laundering risks and concealed potential tax underpayment.

Apart from uncertainties arising from ongoing regulatory probes in Australia, Crown said its earnings outlook will continue to be clouded by pandemic-induced travel restrictions and lockdowns.

Packer is the largest shareholder of Crown, which owns casinos in Australia and London, after taking over the empire of his late father, Kerry. He stepped down from the company’s board in March 2018 and resigned from the board of his family’s holding company Consolidated Press four months later. Packer, 53, is Australia’s 15th richest individual with a net worth of $3.2 billion, according to the World Billionaire’s List published in April.

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