Oaktree Capital Ups Its Bid for Packer’s Shares
The saga of who will run Crown Resorts in the future continues and Oaktree Capital is upping the stakes. There were some investors wondering why Oaktree was interested in the Crown as its original offer seemed to be a bit lacking. Those questions may now have a bit of an answer.
According to various reports, Oaktree Capital is upping its offer to buy back James Packer’s shares to A$3.1 billion. However, under the revised deal, Oaktree will get a 10% stake in Crown. This report comes after a recent report stating that the Victorian Royal Commission is expanding its probe into Crown.
Oaktree Capital Ups Bid for Packer’s Shares to A$3.1 Billion
Oaktree Capital is taking a different approach to helping Crown Resorts get out of its current spot of bother with Australian regulators. Rather than trying to take over the company like Star Entertainment and The Blackstone Group is trying to do, they are looking to help the company get rid of James Packer for good.
— Heard on the Street (@WSJheard) June 15, 2021
Oaktree initially offered to provide funding in the amount of $3 billion to buy James Packer’s shares. However, they have recently upped that offer. The new offer is A$3.1 billion ($2.39 billion USD). Under the new terms, the financing would be a private loan of A$2 billion and another loan of A$1.1 billion that’s convertible into shares of Crown Resorts.
Under the terms of the deal, Oaktree Capital will receive a 10% share of stock into the company. Crown would buy get James Packer’s 37% stake in the company.
New Offer Would Be Alternative to Takeover
Oaktree Capital is offering an alternative to the Crown being taken over by another company. The other two proposals under consideration are from Star Entertainment and The Blackstone Group. Star Entertainment is looking to buy the Crown in an all-stock buyout valued at A$9 billion. If Crown were to pick this option, Star would become the largest gambling company in Australia and one of the largest globally.
The other offer comes from US-based Blackstone Group. They are offering an all-cash buyout of A$8.4 billion. Blackstone’s initial offer to buy Crown was rebuffed following the offer from Star Entertainment. Its offer is still marginally lower than the Star Entertainment offer.
James Packer’s Crown Resorts has rejected Blackstone Group’s A$8.4 billion ($6.5 billion) offer to acquire the Australian casino giant, while considering the merger proposal made by Star Entertainment Group. https://t.co/cPQod5mJw7
— Louisette Lanteigne 🌎✌️⚖️♥️ (@lulex) May 24, 2021
The big difference between Oaktree’s offer and the others is that Oaktree isn’t looking for a controlling stake. Rather they are looking for a 10% stake. This will allow Crown Resorts to continue in its current corporate culture without being tethered to James Packer.
And it’s not like Packer wants to stay with Crown. According to reports, he is looking to sell his shares. Mental health issues are forcing Packer to withdraw from the business world. He is just looking for the right price to sell his shares.
Crown Resorts has yet to form an opinion on the new offer from Oaktree Capital. It is unknown whether they will make a decision anytime soon or wait until further developments occur in the Victorian probe.
Victorian Probe Could Force Crown’s Hand
Last week, we reported that the Royal Commission probe into Crown Resorts is extended until October and the funding almost doubled. Depending on the results of this probe, Crown Resorts may be forced to make a hard choice.
If the current corporate culture proves to be a hindrance in the company having its license restored, the company could be forced to sell out to Star or The Blackstone Group. However, if regulators and the Crown can come to some sort of agreement to get its license back without a takeover, Oaktree’s offer could prove the most advantageous.
Don’t expect a final decision from Crown until closer to August. This should give the company enough time to gauge where regulators are at and help them make a decision on how to proceed.
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