Crown would consider leasing its casinos should it lose its licenses, new CEO says

Crown Resort’s new CEO Steve McCann said last Friday that leasing out the group’s properties is an available option to salvage shareholders’ investment should Crown be stripped of its gambling licenses.

According to McCann, there has been “a lot of inbound inquiry” from potential partners and buyers interested in Crown, reports The Sydney Morning Herald. All options would be on the table should the company be found unfit to run its Melbourne and Perth venues, as the company currently awaits the outcome of royal commissions into both casino’s licenses.

“Clearly we have to anticipate a range of scenarios and be flexible enough to respond to the scenarios that are presented,” said Crown’s CEO. McCann was appointed to the role in June, and is still awaiting approval from gambling regulators.

The license for Crown’s new Sydney casino, which was slated to open last December, has already been suspended after an inquiry found Crown had enabled money laundering at its other properties as well as having been infiltrated by organized crime syndicates.

Despite ongoing interest in Crown’s assets and takeover proposals, including one by private equity outfit Blackstone in May for $8.4 billion and a $12 billion merger proposal by rival The Star –afterwards withdrawn to uncertainties regarding Crown’s licenses–, the company’s focus has been placed on retaining its gambling permits and reforming the business.

Crown has already seen its market value decrease about 30% since early May, with current figures putting it at $6.4 billion. Were the company to lose its licenses and find itself forced to lease out its properties, analysts believe its value would range from $4.8 billion to $5.5 billion.

When asked if Crown would consider an “operating company/property company” model, similar to what The Star is seeking by announcing it would look to sell and lease back its Sydney casino property, McCann stated it would only be seen as a possibility if one of Crown’s licenses was cancelled and it was not given the opportunity to reform itself to win it back.

“That scenario would be sub-optimal for everybody because operating an integrated resort is better achieved with everything together,” said McCann. “It’s not an ideal scenario, but it’s not something we’d rule out if we have to head in that direction.”

Crown’s incoming Chairman, Ziggy Switkowski, is facing calls to resign from his position as chancellor of Melbourne’s RMIT University, casting further uncertainty over the group’s future. It is being claimed that the role at Crown is incompatible with the university’s values, further reports the cited news source.

Switkowski was named to the position last week in order to replace Helen Coonan, who served as both chair and CEO before directors and senior executives were cleaned out due to the scandals surrounding Crown’s activities.

Switkowski has previously worked as CEO of Telstra and Optus, and is currently a non-executive chairman at broadband provider NBN Co. “Ziggy’s experience and capabilities are well suited to meeting the challenges currently confronting Crown,” said the members of the company’s board in an official statement.