Blackstone’s takeover of Crown stalls as probity checks continue

By William Brown Updated
Crown Resorts off the ASX as Blackstone takeover confirmed

The takeover of Crown Resorts by US private equity firm Blackstone is in limbo as the company is yet to confirm Australian gambling regulators it is fit to take control of the casino firm.

The Sydney Morning Herald reports that this news has forced Crown to delay a shareholder vote on the deal by three weeks.

Crown said in a statement released to the Australian Stock Exchange after market close on April 26 that Blackstone had made “good progress” in working through approvals from gambling regulators in each state and territory it operates, “those approvals have not yet been obtained”.

Blackstone and Crown had set an aggressive timetable for the $8.9 billion takeover deal, which some industry observers doubted could be achieved, and scheduled a shareholder vote for April 29.

Crown said it had decided to push that vote back to May 20, with the scheme of arrangement now set to be implemented on June 2.

NSW checks progressing with no cause for concern

A Blackstone spokeswoman said the New York-based firm “continues to work constructively with regulators in relation to this transaction” and looked forward to bringing its industry expertise to Australia.

Blackstone, the world’s largest alternative asset manager with US$881 billion in assets under its management, owns casinos in Las Vegas and Latin America.

The firm needs regulator approval in each state where Crown has casinos, Victoria, NSW and Western Australia and the Northern Territory, where its online wagering business BetFair is registered.

It is not clear if Blackstone has received clearance in any of the four jurisdictions.

However, the chair of NSW’s Independent Liquor and Gaming Authority Philip Crawford said in February that the watchdog’s assessment was almost complete and had not found anything that would stop Blackstone from taking control of Crown.

Crown’s board, which has been entirely replaced following two and a half years of turmoil at the company and now chaired by Ziggy Switkowski, agreed to a binding sale to Blackstone in February after a year-long courtship.

The vote on the deal, which offers them $13.10 cash per share, will be largely decided by Crown’s major shareholder James Packer, who owns 37 per cent of the company.

Mr Packer is said to support the deal and is expected to vote in its favour.

Starwood Capital joins Blackstone to firm up financial offer

A real estate giant has been unveiled as a partner of Blackstone, in its bid to take over Crown Resorts.

Starwood Capital is splitting the whopping $5.4 billion acquisition facility with Blackstone.

The funding package, one of the biggest leverage finance facilities ever in Australia, was laid bare in Crown Resorts’ scheme book in late March, although it is understood the takeover documents told only half of the story.

The scheme book said funds managed by Starwood and Blackstone would provide the $5.4 billion senior term facility and that money would be used to fund part of Blackstone’s bid, refinance existing debt and pay fees associated with the deal.

But behind the Blackstone/Starwood’s unitranche facility is another layer of debt.

The two investors have lined up their own finance or “back leverage” to make their combined $5.4 billion commitment, which is where a big syndicate of big investment banks and global lending banks come into the deal.

Blackstone and Starwood have separate syndicates, sources said.

The structure allows Blackstone to meet Crown’s required gearing ratios, which are in its licences, while making the most of leverage available for quality property and resort assets.

Interestingly, one of the Blackstone bigwigs behind the transaction, Singapore-based real estate boss Alan Miyasaki, formerly worked on acquisitions at Starwood Capital.

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