Crown Resorts Plans Australian Casino Split

Changes to Crown Resorts Asset Setup

Revenue in Macau has been hit hard in the past few years.

Crown Resorts has announced a change to its assets setup so that Australian casinos can be evaluated for what they are truly worth.

The Australian gambling and resort group said that its high-performing casinos Down Under would have their assets separated from the international business side of things, which comprises properties in Macau, among others.

"The board has for some time been looking to address what we believe to be a material undervaluation by the market of Crown Resorts' assets, due to a traditional consolidated (or amalgamated) structure," said the chairman of Crown Resorts, Robert Rankin said in a statement this week.

"In particular, we believe that Crown Resorts' extremely high quality Australian resorts are not being fully valued and the Crown Resorts' share price has been highly correlated to the performance of its investment in Macau."

New Macau Entity

According to Crown, a new entity will take the group's interest in Melco Crown Entertainment, which is mainly Macau-focused but also has assets in the Philippines and Las Vegas.

The Chinese government has cracked down significantly on Macau due to corruption reports, and revenue has thus fallen 34.3% in the last year.  This is the lowest that Macau has seen its revenues drop in a period of five years.

The international assets spin off will also include Crown's 50% holding in Aspers Casino and its investment in Caesars.

Crown Stakes Climb

As a result of the news that Crown is planning to spin off its international investments into a separate company, the company's shares surged on the stock market by 13%. Share prices were at a 10-month high and priced at $12.75 in Sydney yesterday.

Crown's exposure to Macau's turbulent market has affected the company and its debt position.  In early 2016, fund manager Colonial First State dumped its Crown Resorts shares, after warning the company that the privatization of some of its businesses and other issues "have not improved the perception of the board."