Crown share price: Implications of Oaktree’s Funding Proposal
We examine what Oaktree Capital Management’s funding proposal may mean for the casino operator.
Crown Resorts Limited (ticker: CWN) on Monday revealed that it had received a proposal from alternative asset specialist Oaktree Capital Management.
The basics of this proposal?
According to the announcement, Oaktree approached Crown with a funding commitment, of up to $3.0 billion, aimed at helping Crown buy back shares owned by Consolidated Press Holdings Limited (CPH).
The funding commitment, which would be facilitated through a structured instrument, would allow Crown on a selective basis to buy back some or all of the outstanding CWN stock held by CPH.
The proposal for the funding commitment is non-binding, preliminary, was unsolicited, and Crown’s Board has yet to form a view on its merits. The company further pointed out that any buybacks would have to be approved by the Crown Board.
For reference, CPH is a private investment company well known to be used as a business vehicle for the Packer family empire. It currently holds a 37% stake in Crown.
In 2018 James Packer stepped down from the CPH Board.
According to Dun & Bradsheet CPH was founded in 1954, has 62 employees and in 2020 generated ~$11 USD million in sales.
Ultimately, it’s been a busy period for Crown. In late March the company received a takeover proposal from Blackstone, another leading global investment firm.
The indicative price of the offer was $11.85 per shar – to acquire all of Crown’s outstanding shares. That offer represents a significant premium to what CWN was trading at, at the time. The stock, unsurprisingly, surged in response.
The company announced some modifications to the proposal offer in mid-April, with Blackstone modifying the regulatory Approval conditions of its proposal.
One of the key points of these new conditions was that Blackstone required that none of:
'Crown's VIC or WA casino licenses is, or is threatened to be, cancelled, suspended or surrendered (or subject to a similar action) or ILGA confirms, or threatens to confirm, that Crown's NSW license is not be granted (or subject to a similar action).'
As we wrote previously, while the market has responded with optimism to the Blackstone takeover bid, there remains two key points of uncertainty for the casino operator, including:
- AUSTRAC's ongoing investigation into Crown – which is chiefly focused on customer due diligence and AML/ CMF matters.
- A royal commission into Crown’s Perth and Melbourne casinos. The commission commenced in late-March.
That aside, over the last month the Crown share price is up approximately 21%, trading just above the Blackstone offer price.
CWN is up 48% in the last year.
Trade Crown long and short with IG today.
Create an IG trading account or log in to your existing account to get started now.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.