Firms: Ashurst (Crown Resorts Limited)
Deal: Crown Resorts has proposed a number of major structural and capital management initiatives.
Key players: The Ashurst team advising Crown Resorts was led by partners Phil Breden and Anton Harris, with M&A senior adviser Garry Besson. They were assisted by corporate partners Elspeth Arnold and Michael Ryland and banking partner Rob Ritchie.
Deal significance: The Crown Resort board has endorsed three initiatives in response to what it perceives as the undervaluation of its casino, wagering and online assets. In an ASX media release issued last week, the company suggested a traditional consolidated structure was hindering the material valuation of its assets.
Commenting on the initiatives, Crown Resorts chairman Robert Rankin said they would "ensure a more efficient ownership structure for the group’s assets".
"The board has for some time been looking to address what we believe to be a material undervaluation by the market of Crown Resorts' assets, due to a traditional consolidated (or amalgamated) structure. In particular, we believe that Crown Resorts’ extremely high-quality Australian resorts are not being fully valued and the Crown Resorts share price has been highly correlated to the performance of its investment in Macau," Mr Rankin said.
The structural and capital management proposals, which aim to increase Crown Resorts’ shareholder value, include a proposed demerger of certain international investments, a new dividend policy to pay 100 per cent normalised profit after tax and the IPO of a 49 per cent interest in a property trust. The proposed demerger will progress independent to the evaluation of the potential property trust IPO.
According to Mr Rankin, the demerger proposal aims to reflect the different nature of controlled Australian operating assets from international investments.
"It will provide investors with greater investment choice and transparency on the underlying quality of all of Crown Resorts’ assets," Mr Rankin said.
"Following the proposed demerger, investors will have the opportunity to invest in Crown Resorts, which will own and operate Australia's pre-eminent integrated resorts, with exciting developments such as Crown Sydney.
"Investors will also have the opportunity to invest in a separate company which will own a number of Crown Resorts' international investments and provide exposure to the major gaming markets of Macau, Las Vegas and the UK," he added.
On completion of the demerger, a separately listed holding company named InternationalCo will be created. InternationalCo will own Crown Resorts’ respective interest in Aspers, MCE, Nobu and investments in Caesars and the Alon development site in Las Vegas.
Following the demerger, each company will have its own board of directors and management team. Under the proposal, shareholders will receive new shares in InternationalCo proportionate to their existing Crown Resorts shareholding, while retaining their existing Crown Resorts shares.
The proposed demerger is also subject to further approval from the Crown Resorts board and is shareholders under a scheme of arrangement. Additional third-party approvals, consents and waivers must also be given.