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Thursday, March 12, 2009 | 6:32 p.m.
Australian casino giant Crown Ltd. has terminated its $1.8 billion purchase agreement for Cannery Casino Resorts to allow for more time to consummate a deal.
In a statement today, Cannery Casino Resorts, which owns the Cannery in North Las Vegas, the Eastside Cannery and the Rampart, near Summerlin, said it will instead receive $370 million from Crown, including a $50 million breakup fee, and a $320 million non-voting investment of Series B shares in the Las Vegas company.
While neither party's announcement elaborated on the reasons for the termination, news reports from Australia indicate that the sister of James Packer, who controls Crown, was reluctant to submit to regulatory licensing requirements in Pennsylvania. The Packers need to be licensed in Pennsylvania, where Cannery owns a racetrack casino, to consummate a deal.
Crown received final approval from Nevada regulators in January.
The company has a minimum of 60 days – or 90 days, if Cannery agrees to extend the deadline – to clear regulatory hurdles as a preferred stockholder. If approvals aren't obtained by that time, Crown will not be issued Series B shares and will pay an additional $200 million fee to Cannery. Also, Crown would invest $40 million into Cannery for a 4.1 percent non-voting stake.
If the share purchase is consummated, Crown has two years to convert those shares into a 24.5 percent stake in Cannery and buy the remaining interest in the company for $1.4 billion.
The investment puts Cannery "in an enviable position in the gaming industry" with a "strong balance sheet" and "ample liquidity" to weather the economic downturn, Cannery's co-Chief Executive, Bill Paulos, said in a statement.
Owners Paulos and Bill Wortman will remain at the company's helm, with investment firm Oaktree Capital continuing to own 42 percent.
Crown has a 19.6 percent stake in the Fontainebleau resort under construction on the north end of the Las Vegas Strip. The company, which operates resorts in Australia, Britain, Canada and Macau, expects to open a second casino in Macau with partner Melco International by mid-year.
Packer is the son of legendary casino high-roller Kerry Packer. When he died in December 2005, Kerry Packer was Australia’s richest man.
The Sydney Morning Herald is excoriating the late Kerry Packer's offspring for making dumb decisions not just in Vegas, but all over the world. Sometimes, the brain genes don't just pass automatically down the line. Sad, because they have beautiful giant casinos in Australia that Kerry developed. You have to wonder if, when introduced, Gretel Packer says "This is my brother James, and my other brother James".
Amazing the deals that are getting done in this particular economy.
Surely it had to get restructured as the pricing created in 2007 would be inoperable today.
This looks like a good deal for both parties.
Plus the Bill's get a 50 mil kicker.
Not bad.
Win - win for the Cannery.
BTW the Eastside Cannery is a good looking, and easy breathing casino. There were a lot of people there on Monday, but the air was not stale for us non-smokers. Plus the new buffet is almost open.