Crown Resorts’ largest shareholder James Packer asked Melco Resorts Chairman and CEO Lawrence Ho to find out how Macau gaming regulators felt about his potential involvement in a merged Crown-Wynn Resorts entity before a mooted transaction fell through last year.
The events leading up to Packer’s May 2019 decision to sell a 19.99% stake in Crown to Melco Resorts formed a key focus of an inquiry into the company’s suitability to hold a NSW casino license on Wednesday as the former Crown Executive Chairman faced a second consecutive day of questioning.
Melco eventually acquired only an initial 9.99% stake before offloading it to American multinational private equity and hedge fund giant The Blackstone Group in April 2020. The inquiry had been due to investigate Melco’s dealings with Crown and in particular its links to Macau gaming forefather Dr Stanley Ho – the father of Lawrence Ho and a prohibited individual under Crown’s NSW casino license.
Packer and Lawrence Ho had previously been partners in Macau gaming operator Melco-Crown before Melco bought out Crown’s entire stake in 2016.
While Packer would eventually propose the two come together again in early 2019, it was revealed Wednesday that he had originally been focused on a potential merger with Wynn Resorts – even after the US casino giant aborted preliminary discussions on 9 April 2019.
He was, however, concerned by how Macau’s Gaming Inspection and Coordination Bureau (DICJ) might view him holding a stake in any merged Wynn entity after 19 Crown Resorts employees were arrested in mainland China for the illegal promotion of gambling in late 2015.
In email discussions between Packer and Ho the week after Wynn’s withdrawal that were made public at the inquiry on Wednesday, Ho stated, “I’ll be in Beijing on Thursday and Friday for the Belt and Road Forum and I’ll be speaking to the State Council people about what we discussed.”
Asked by Council Assisting the inquiry Adam Bell what Ho was referring to, Packer replied, “I had discussed with Mr Ho whether he could get a sense of the Macau regulatory authority’s opinion on Crown.”
An emailed reply from Packer to Ho on 19 April 2019 read, “Just so you know I have reason to believe Wynn will rebid if they are sure Macau regulatory approvals will be ok. So I’m hoping you could work your magic.
“In all seriousness I don’t think I should be banned from having a 10% interest with no board representation.”
Packer clarified to the inquiry, “That was a reference to Macau regulatory approvals if the Wynn transaction proceeded, and my shareholding would have been about 10% … in a combined Wynn, Crown entity.”
Packer also revealed that it was his decision to ask Ho about Melco acquiring Crown shares with the pair initially discussing a full merger of the two companies.
However, “it quickly got to the position of that didn’t suit him and that didn’t suit me. Lawrence was interested in doing something with Crown if we could make it work. He believed in the assets.”
Packer said that he “gave no thought” to the regulatory agreement between Crown and the NSW regulator prohibiting the company from doing business with Dr Stanley Ho or certain associates. Noting that Dr Ho, who passed away earlier this year, was “in a very sickened state,” Packer added, “I regarded Melco as Lawrence’s company rather than Stanley’s.”
He also refuted suggestions he had sought financial forecasts from Crown executives in order to better determine a sale price for Crown shares to Melco.
“I was flexible on price because I wanted to do a deal with Lawrence,” Packer said. “Lawrence and I never discussed price, we agreed price when a price was put in front of both of us.”
When Bell suggested Packer must have been interested in trying to work out an appropriate price, he responded, “I had strong opinions about what Crown was worth. I thought about it every day.”