Australian gambling operator Crown Resorts Ltd., headed by business magnate James Packer, is raising the amount of AU$400 million to fund some of its projects, including the construction of Crown Sydney, a AU$2-billion hotel and casino resort that is to be located at Barangaroo, Sydney.
It was announced that Mr. Packer is planning to tap a loan totaling AU$50 million from the UBS investment bank. The money is to be used for the purchase of both debt and equity securities.
As mentioned above, Crown is raising the money in order to fund some of its major projects, Crown Sydney and the addition of a hotel tower at the company’s Perth venue included.
Ken Barton, who is taking the position of a chief financial officer at the gambling company, commented that several important projects are currently under development and they will help Crown further consolidate its positions as one of the world’s major operators of hotel and casino resorts.
Earlier today, Crown released a prospectus for the upcoming subordinated notes issue. According to it, note holders are to be given a 6.32%-6.52% initial yield per year.
Barry Ziegler and Damien Williamson, analysts at Bell Potter, defined the yield as an attractive one. Yet, they commented that there is a risk that Crown might not be able to pay its debt out of returns from its major projects, once they are completed.
This is the second time that the casino operator raises funds by means of subordinated notes issue. Back in 2012, the company announced that it was planning to raise AU$500 million for various other projects.
Crown pointed out at a special presentation for investors that up to fiscal year 2016-17, it is expected to have carried out projects worth of over AU$2.8 billion at its properties in Perth and Melbourne.
The amount of AU$200 million has been spent up to now at the operator’s Perth casino. The entire budget for the property’s expansion was estimated to be about AU$645 million.
Moreover, Crown is also planning to add a luxurious hotel tower to its gambling venue in Melbourne. The operator is to be working in collaboration with the Schiavello Group, an Australian real estate developer.
Back in August 2014, Mr. Packer’s company purchased land on the Las Vegas Strip, where a new casino is to be built in future. According to the initial plan, the venue will be completed sometime in 2018. It will aim at attracting not only local players, but also Asian high rollers.
