Oaktree Capital Group Offers Packer Buyback to Crown

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If you’ve followed the ongoing saga surrounding Crown Resorts Ltd, then you know that the Blackstone Group is looking to buyout the company for A$8 billion. It seemed that the Blackstone offer was the only chance for the Crown to get out of its legal quandary. However, things have changed thanks to the Oaktree Capital Group.

According to breaking news from various sources on Monday, Oaktree Capital Group is looking to buyback James Packer’s stake in the Crown for A$3 billion. This limited takeover would likely solve many of Crown’s legal issues without having to accept what some see as an unvalued offer from Blackstone.

Oaktree Capital Group Proposes Buyout of Packer’s Shares

On Monday, Reuters and various other news sources reported that the Oaktree Capital Group is proposing to fund a buyback of James Packer’s share in Crown Resorts. The deal will be for A$3 billion and will cover the 37% stake belonging to Packer. Crown representatives did not comment on what Oaktree will get in exchange for this buyout.

Packer is the center of various findings against Crown from regulators. His influence over the casino as a major shareholder has been in question for a long time. Findings of money laundering and criminal activity surrounding the Crown led to the company losing its Sydney casino license.

Packer is no longer part of Crown’s Board of Directors. However, it is said to have a significant influence on the board. Some of the members are allied with Packer and he has been privy to financial reports normally only reserved for board members.

Regulators are insisting that Packer’s role be largely if not completely cut out from Crown. The buyout from Oaktree would achieve this without having to sell the company as a whole.

Blackstone Not Favorable to Some Investors

The Blackstone Group proposal has met opposition from Crown shareholders. Many think that the offer from Blackstone undervalues Crown. They point to the company’s value pre-pandemic and think that Blackstone is merely trying to take advantage of the pandemic.

It does not appear that the Oaktree proposal has caveats to it as the Blackstone proposal does. Blackstone is requiring that the company does not lose any additional licenses or else the deal is off. For the Oaktree proposal, they are merely buying back a portion of shares without having complete control of the company.

Some shareholders question this. Shareholder Angus Gluskie of White Funds Management is questioning the deal. He states, “There is obviously a reason Oaktree doesn’t want some element of the business or wants to receive some uplift in the return that accrues to them, above and beyond the return of a normal shareholder.”

Packer is in support of a buyout, and who could blame him. Regardless of which proposal Crown accepts, he stands to get A$3 billion. The main difference is that the Oaktree proposal will give Crown the ability to rebound from the Packer legacy on its own without giving up full control.

Oaktree Proposal Could Be Crown’s Golden Goose

The Blackstone Group’s proposal looked to be the only way out for the Crown simply because nobody else was stepping up to help. Oaktree is now offering the casino a way to escape the shadow of Packer and rebuild its brand.

It’s safe to assume that an Oaktree buyout of Packer’s shares will be the main ingredient necessary for Crown to retain its licenses and get back its Sydney license. We suspect the Crown to give serious attention to this deal. It will allow the company to survive without having to completely reorganize. Granted, another party could step forward or Blackstone could improve its offer. We will keep you updated on this story as it develops.