Australian casino operator Crown Ltd, a 37 percent shareholder in the Macau gaming developer Melco Crown Entertainment (MPEL) has taken steps to strengthen its capitalisation during the global economic turmoil.
Crown has issued AUD300 million worth of new equity—one third of it acquired by Consolidated Press Holdings, an Australian company held privately by James Packer, a co-chairman of MPEL.
The move is one of a raft of measures to boost Crown’s balance sheet. One benefit is that Crown is less likely to need to turn to the stricken credit markets for its share of the cash needed to complete MPEL’s City of Dreams integrated resort on Cotai, say analysts.
Crown does though have other pressing funding issues in North America. Harrah’s Entertainment and Station Casinos Group, companies where Crown has a 2.5 percent and a 4.9 percent stake respectively, have been busily trying to renegotiate their heavy debt loads.
Earlier this month Crown said it had injected an extra CanD20 million into a nine-casino project in Canada operated as a joint venture with Macquarie Bank.
Only a week ago Crown announced measures to roll over its debt commitments by raising AUD1.6 billion from ten banks to repay debt that had been due in August 2010. Crown’s next major refinancing is now due in late 2011.
Crown said it would use the funds raised from the equity placement to “increase funding flexibility”. In comments reported in the Australian media, Geoff Kleemann, Crown’s Chief Financial Officer, said the offer was “near twice” oversubscribed, but the company was not tempted to try to raise more money.
“We knew what we wanted to raise and what made sense in raising some money to shore up the balance sheet. In the current climate our board just likes to be prudent,” he added.