Billionaire James Packer’s Crown Credit Profile Pressure

Between recent increases in costs to guarantee Crown Resorts’ bonds, increased net debt, expanded credit default swaps, significant profit declines from Macau real estate, and plans to invest billions more in Australia and Las Vegas, James Packer’s business and expansion plans are bolstering financial scrutiny.

Crown recently announced that Packer will step down as chairman and move away from the company’s day-to-day management to focus on development and expansion. His main projects are the 35-acre Alon Unified Mega Resort in Las Vegas and a cybersecurity company in Israel. Packer may also be looking to re-tool MelcoCrown’s $2.3 billion Studio City resort in Macau to expand beyond games into exhibitions.

Deutsche Bank and Credit Suisse are rushing to finance the Alon property and are looking for a third-party stake that will lower Crown’s current 73% stake. However, these moves are inconsistent with other properties in the portfolio.

Despite a severe profit slump from Macau and concerns from bondholders, Moody’s Investors Service reported Crown had a stable outlook with no immediate impact on their rating. 2.5 Leverage “remains within the allowable range 3.0 set for ratings, but given the number of major projects being undertaken by Crown, headroom is significantly reduced and the risk of downward pressure increases.”


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