James Packer's Crown Resorts is staging a massive retreat from its troubled international operations, selling down its stake in Macau casinos and abandoning plans to build in Las Vegas.
Crown said on Thursday it had agreed to sell $1.6 billion worth of shares in its Macau casino business to its joint venture partner, Melco International.
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Why Crown Resorts is selling Melco shares
Crown Resorts scrapped plans to spin off its international assets as it announced a $1.6 billion sale of shares in Melco Crown Entertainment to cut debt.
The move follows the arrest of 18 Crown employees in mainland China for "gambling crimes", allegedly over attempts to lure rich gamblers to its casinos.
The sale will reduce Crown's stake in the Macau casinos from 27.4 per cent to 14 per cent. Crown will use the cash to cut its debt by $800 million, pay a special $500 million distribution and fund a $300 million share buy-back.
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Mr Packer, who owns 48 per cent of Crown, will collect $240 million from the special distribution.
Crown shares were halted from trading on the ASX on Thursday as the company sought to "monetise" some of it remaining stake in the Macau venture.
VIP woes
Crown also revealed it was shelving plans to build a new casino in Las Vegas and would not proceed with a proposed spin-off and float of its international assets.
The decisions, which come close to ending its global expansion plans, came after total revenue across its Australian resorts fell by about 12 per cent in the first half of the 2016/17 financial year.
Providing a trading update, Crown revealed turnover from VIP gamblers plunged 45 per cent from the same period last year.
Casinos in Macau, the world's largest gambling hubs and the only part of China where gambling is legal, have suffered a downturn as the Chinese government cracked down on corrupt officials and stemmed the flow of money out of the country.
Crown's Macau venture, Melco Crown Entertainment, owns three casinos and resorts in the former Portuguese colony, and the City of Dreams complex in the Philippines.
Crown chairman Robert Rankin said the international retreat would maximise value for shareholders and "underpin the company's future of the next decade."
Second time unlucky
Looking to build a presence in the US gambling mecca Las Vegas, Crown announced in 2014 that its majority owned Alon subsidiary would build a $2 billion casino on "the best piece of undeveloped land on the Las Vegas strip" by 2018.
That plan has now been scrapped following "an extensive review of funding alternatives… over the last two years", Crown said on Thursday, explaining it will look at ways to wring value out of its investment in Alon, including an outright sale.
It's the second time Mr Packer has tried and failed to crack the iconic Las Vegas market, after his disastrous gamble on Cannery Casino Resorts in 2007.
The international retreat will help Crown free capital for its" strong portfolio of future projects", including the Crown Sydney casino development at Barangaroo, said Rankin.
Despite its sell-down, the City of Dreams casino in Macau will continue to be run under the Crown brand. Melco Crown will get a trademark licence for the Crown Towers brand, but will have to drop 'Crown' from its corporate name within six months.
Mr Packer will resign from the venture's board.
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