The Independent Liquor and Gaming Authority (ILGA), the New South Wales casino decision-maker, was initially supposed to allow Crown Resorts to open its Barangaroo casino in November, as the organisation itself indicated.
It was given the now-famous Bergin report into Crown Resorts’ inner dealing back in February, but it seems that the authority is still not ready to make a final decision. Some NSW government officials have privately stated that Crown Resorts shouldn’t expect to get its licence back until sometime in the first quarter of 2022.
This is also evident from the fact that ILGA officials met with Crown representatives on Monday to continue their discussions about the new massive casino the James Packer-backed business was supposed to open in the Barangaroo area of Sydney. No final decision was made at this meeting.
However, despite all of this, ILGA still expects that Crown will be able to start operating its new casino next year. This is also a good sign that the authority has decided to separate its decision-making process from the judgments in the inquiries in Western Australia and Victoria.
The Victoria inquiry has already recommended that James Packer, the biggest shareholder in Crown, diminish his 37% stake to less than 5% by 2024. On the other hand, the inquiry in WA is still not done, and the report is expected to come sometime in March.
A prompt resolution of this issue is crucial to Crown as its potential deal with the US private equity juggernaut, Blackstone, depends on it. Blackstone has had a bid to acquire the casino group for some time now, an offer that has valued Crown at $8.5 billion.
The problem here is that Blackstone’s bid can only be accepted if the Crown board unanimously agrees with the offer and if the regulators in New South Wales, Western Australia, and Victoria approve it.
Sceptics are not convinced that the offer has much chance to pass in its current form, but not for regulatory hurdles. Some believe that the offer won’t gain support from all shareholders. James Packer is likely to accept it as he must reduce his stake in the company, but the same cannot be said for the others.
It’s expected that Blackstone will need to improve its offer for the shareholders to accept it. However, the current proposal fits into Blackstone’s strategy of acquiring companies, fixing them, and eventually selling them.
Nothing is set in stone now, but we are likely to see a resolution come to fruition in 2022 once the regulatory hurdles are settled. We’ll make sure to update you with any new information in the meantime.
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