Echo, based in Brisbane, will seek to raise between A$400 million ($399 million) and A$500 million in a rights offering being managed by UBS AG and Macquarie Group Ltd., according to a person with knowledge of the matter. The details may be announced as early as tomorrow, the person said, asking not to be identified as the information is private.
Crown, which owns 10 percent of Echo, will wait for details of the share sale, Chief Financial Officer Ken Barton said by telephone from Melbourne today.
Packer agreed to cease a campaign against Echo after Chairman John Story stepped down June 8, Acting Chairman John O’Neill said yesterday. Crown is seeking regulatory approval to increase its holding in the operator of the only casino in Sydney above the current 10 percent limit as Genting Singapore Plc (GENS) built a stake of 4.9 percent.
“We’ll wait to see what they’re proposing,” Barton said.
Trading in Echo shares was halted yesterday, ahead of the capital raising. Spokeswomen for UBS and Macquarie in Sydney declined to comment.
Brad Schmitt, a Sydney-based spokesman for Echo, declined to comment on the fundraising plan in an e-mailed statement. The Australian Financial Review reported that Echo is planning to raise A$400 million earlier today, without saying where it got the information.
Genting’s stake may make it harder for Crown to take control of Echo and increases the chances of a bidding war, according to Gary Pinge, Macquarie Group Ltd.’s regional head of gaming and consumer research. Though a joint bid by the two companies is possible, Crown won’t want to see Genting “entering its backyard,” he said.
Story resigned after Crown, which owns casinos in Melbourne and Perth, called a meeting to vote on his removal and ran advertisements in local newspapers criticizing the company’s “underperformance” under his leadership. Packer has now withdrawn his request for a shareholder meeting.
Echo owns the Star in Sydney as well as three casinos in the state of Queensland.
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