Crown Plans to Sell A$400 Million of Subordinated Listed Notes
Crown Ltd. (CWN), the casino company controlled by Australian billionaire James Packer, plans to market A$400 million ($423 million) of subordinated notes as it seeks to fund hotel projects while keeping its credit rating.
The casino company is offering unsecured, subordinated, cumulative notes due in 2072, which Melbourne-based Crown can buy back from 2018, according to a regulatory filing today. The margin on the securities, which will trade on the nation’s biggest securities exchange, is expected to be 500 basis points, or 5 percentage points, more than the three-month bank bill swap rate, according to the filing.
Crown expects credit ratings firms will treat part of the proceeds from the offer as equity, bolstering its balance sheet, it said today. Consolidated Press Holdings Pty, Packer’s personal investment company and a shareholder in Crown, will buy A$100 million of the notes, according to the filing.
Proceeds from the offer “will diversify Crown’s funding sources and will provide greater flexibility to refinance upcoming debt maturities,” Chief Financial Officer Ken Barton said in the filing.
The company announced plans this month to develop hotels in Perth and Sydney. It is also seeking regulatory approval to increase its stake in rival Echo Entertainment Group Ltd. (EGP), owner of Sydney’s only casino license, to 25 percent from 10 percent.
Crown holds a BBB rating from Standard & Poor’s and Fitch Ratings, the second-lowest investment grade ranking, and the equivalent Baa2 from Moody’s Investors Service.
Crown plans to spend A$568 million to build a 500-room hotel in Perth, the capital of Western Australia state, the company said in an Aug 1 regulatory statement. It has signed an exclusive agreement with Lend Lease Group (LLC) to build a luxury hotel resort at Sydney’s harborside development know as Barangaroo South, it said the following day.
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