Australian giant casino and entertainment group, Crown Resorts, has announced that it will be selling part of its stakes in the Macau focused Melco Crown Entertainment.
James Packer will step down as co-chair of Melco Crown and will take up the role of deputy chair of Melco. Rowen Craigie will also step down from the Melco board.
Crown Resorts will reduce it stake in Melco Crown from the previous 34.4% to 27.4%.
Crown will use the $800 million it hopes to make from the sale of its stakes to reduce part of its large debt pile. Melco will repurchase 155 shares from Crown subsidiary, Crown Asia Investments. The group said that it did not rule out the possibility of returning in a fuller capacity to Macau at a later date.
Investing in Australia
Crown Entertainment said that it would be using the cash from the sale of its stakes to fund existing developments in Australia.
In a statement to the ASX, the group said: "Following completion, Crown will assess its capacity to make a distribution to shareholders, and at the same time maintain a strong balance sheet and credit profile to fund existing Australian development projects, including Crown Sydney. Crown will provide an update to the market once it has completed this assessment."
Crown needs to do something to counter its debt which jumped 47% to $2.5 billion last year, if it wants to maintain its BBB credit rating with Standard and Poor's.
Tumbling Macau Revenues
Revenues in Macau continue to slump, with the Chinese enclave reporting tumbling revenues for the past two years. The Beijing government has been cracking down hard on corruption in Macau, which is the only place that Chinese nationals can legally gamble in a casino.
Analysts believe that Crown's partial distance from Melco is a positive thing for Lawrence Ho as it gives him full control over the operations and strategic direction of his company.