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Packer Gets Crown Exit Path With $2.3 Billion Oaktree Offer

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Angus Whitley
·3 min read
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(Bloomberg) --

James Packer has a potential new exit path from troubled casino operator Crown Resorts Ltd. after Oaktree Capital Management LP offered to help Crown fund a purchase of the billionaire’s shares.

Oaktree has offered as much as A$3 billion ($2.3 billion) in financing for the deal through a “structured investment,” Crown said Monday. According to the proposal, Crown would use the funds to buy some or all of Packer’s 37% stake in Crown.

Removing Packer from Crown’s shareholder registry might go some way toward rehabilitating the company as regulators across Australia assess its suitability to run casinos. A report for the gaming watchdog in New South Wales state in February found widespread management and cultural failings at Crown and said Packer’s influence had “rather disastrous consequences for the company.”

Crown hasn’t been allowed to start gaming operations at its new A$2.2 billion Sydney casino resort.

Read more: Packer’s Casino Dream Dashed as Crown Seen Unfit for License

Crown said it will assess Oaktree’s offer. Packer’s Crown shares are held by his private investment company, Consolidated Press Holdings Pty.

It’s not clear whether Oaktree -- an alternative investment manager that focuses on credit strategies -- plans to invest directly in Crown or just finance a buyback of Packer’s stock. But the U.S. firm’s offer puts the billionaire’s cornerstone stake at the center of a bidding war. Blackstone Group Inc., which owns 10% of Crown, last month offered to buy the rest of the company in an A$8.02 billion deal.

Crown shares rose 0.7% to A$12 at the close in Sydney, valuing the company at about A$8.1 billion. Blackstone has offered A$11.85 a share in cash for Crown stock.

Oaktree’s offer is a possible quick fix for Crown before independent inquiries into the company’s fitness to operate casinos in Perth and Melbourne deliver verdicts this year.

Buying Packer’s stake would solve some of the conflicts of interest identified in the report for the New South Wales regulator -- without ceding control of the entire company. Blackstone also needs to wait for permission from regulators to own and operate Crown’s casinos.

Packer has already distanced himself from Crown since the explosive report in February, and his board nominees have quit Crown’s board. Last week, the New South Wales gaming regulator said Packer has also agreed not to strike information-sharing arrangements with Crown or start discussions with the company other than through public forums.

Read more: Blackstone Doubles Down on Hospitality in $6.2 Billion Crown Bid

A representative for Consolidated Press declined to comment on Oaktree’s proposal. Oaktree declined to comment when asked whether the firm planned to own a stake in Crown.

Packer, who has stepped back from Crown and corporate life to fight a mental-health battle, has previously failed at least twice to find a suitor.

Wynn Resorts Ltd. in early 2019 abruptly ended talks to buy Crown for about A$10 billion, just a few hours after the discussions leaked to the media. Last year, Melco Resorts & Entertainment Ltd. scrapped a deal to buy 20% of Crown from Packer.

(Adds no comment from Oaktree in 11th paragraph.)

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