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Crown sells out of Macau

The company has sold its remaining stake in Melco.
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Jon Mills
By Jon Mills · 9 May 2017
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Jon Mills
By Jon Mills ·
9 May 2017 · 2 min read
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Recommendation

Crown Resorts Limited - CWN
Buy
below 11.00
Hold
up to 17.00
Sell
above 17.00
Buy Hold Sell Meter
HOLD at $12.70
Current price
$13.09 at 16:35 (01 August 2022)
Price at review
$12.70 at (09 May 2017)
Max Portfolio Weighting
5%
Business Risk
Medium-High
Share Price Risk
Medium-High
All Prices are in AUD ($)

Crown Resorts today sold its remaining 11.2% stake in Nasdaq-listed Melco Resorts & Entertainment (FKA Melco Crown), the owner of casinos in Macau and The Phillippines, back to the company for US$7.04 per share.

As a result, Crown also closed out hedges over 7.9% of this stake (see Crown recommences trading and Crown hedges more of Melco). With the hedges struck at US$5.33 and US$6.02, respectively, the company recorded a loss of around US$177m, meaning the net proceeds from the transaction will be about US$987m, or AU$1.34bn, before transaction costs. 

The proceeds will 'initially be used' to further reduce Crown's net debt, while the company continues to repurchase its ordinary shares and Crown Subordinated Notes.

With Crown no longer having any exposure to Macau, we'll have a more detailed article on the company within coming weeks. HOLD. 

Note: The Intelligent Investor Growth and Equity Income portfolios own shares in Crown Resorts. You can find out about investing directly in Intelligent Investor and InvestSMART portfolios by clicking here.

Disclosure: The author owns shares in Crown Resorts.

IMPORTANT: Intelligent Investor is published by InvestSMART Financial Services Pty Limited AFSL 226435 (Licensee). Information is general financial product advice. You should consider your own personal objectives, financial situation and needs before making any investment decision and review the Product Disclosure Statement. InvestSMART Funds Management Limited (RE) is the responsible entity of various managed investment schemes and is a related party of the Licensee. The RE may own, buy or sell the shares suggested in this article simultaneous with, or following the release of this article. Any such transaction could affect the price of the share. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.
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Crown Resorts sold its remaining 11.2% stake in Melco Resorts & Entertainment to reduce its net debt and focus on repurchasing its ordinary shares and Crown Subordinated Notes.

Crown Resorts sold its stake in Melco Resorts & Entertainment for US$7.04 per share, resulting in net proceeds of about US$987 million, or AU$1.34 billion, before transaction costs.

The sale resulted in a loss of around US$177 million due to hedges struck at lower prices. However, the net proceeds from the transaction will help reduce Crown's net debt.

The proceeds from the sale will initially be used to further reduce Crown's net debt. The company also plans to continue repurchasing its ordinary shares and Crown Subordinated Notes.

No, Crown Resorts no longer has any exposure to Macau following the sale of its stake in Melco Resorts & Entertainment.

Yes, a more detailed article on Crown Resorts will be published in the coming weeks, providing further insights into the company's future plans.

You can find out about investing directly in Intelligent Investor and InvestSMART portfolios by visiting their respective websites and exploring their investment options.