Casino developers and operators Melco Resorts & Entertainment, recently rebranded from Melco Crown, and Crown Resorts announced today that they will part ways after a decade of collaboration.
The joint venture will be put an end to with Crown selling the final portion of its stake in the two companies’ joint venture. The Australian casino operator said in a stock exchange statement that it would receive A$987 million from the sale. It further noted that proceeds will be used to reduce its net debt.
Crown originally owned a 34.3% stake in the Melco Crown Entertainment joint venture. About this time last year, the company sold a portion of its shares in the casino developer and operator but said that it would continue investing significantly in its international operations.
In October, news broke that 18 Crown staff members were detained in China for allegedly providing illegal gambling services. It was believed that employees at the company traveled around the Asian country to allure high roller players to its casinos. The promotion of casino gambling options is illegal under Chinese laws.
The staff arrests hit Crown’s profitability significantly, as VIP visits from Mainland China dropped quickly in the days and weeks after. In December, the operator began reducing its interest in its joint venture with Melco International Development, owned by Hong Kong business mogul Lawrence Ho. At the time, the Australian casino operator also abolished plans to demerge its domestic and its international operations in two separate business endeavors.
The detention of Crown staff and the ensuing financial complications for the operator brought former CEO and Chairman James Packer back on board. The businessman abandoned his executive posts at the operator in 2015, but returned as a Director in early 2017 as part of a board reshuffle that also saw John Alexander named as Chairman.
Crown said in a Tuesday statement that it will now focus its attention on its domestic business. The company owns two integrated resorts – one in Perth and one in Melbourne. A A$2-billion resort is currently under development at Sydney’s Barangaroo precinct.
The expensive project had faced multiple challenges over the years after it had first been introduced. However, the last of the hurdles was cleared last year and Crown was given the green light to proceed with construction work. It is expected that the complex will be completed and launched in the early 2020s.
The property had originally been promoted as a destination resort for high rollers from Mainland China. However, following the Crown staff arrests, gambling insiders have questioned Crown Sydney’s future success.
It is believed that Crown will complete transaction of its remaining interest in Melco Resorts & Entertainment by next Monday.
