Las Vegas Sun

April 21, 2014

Currently: 78° — Complete forecast | Log in | Create an account

Australian company ends Cannery purchase agreement

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.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy

Previous Discussion: comments so far…

Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy. Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun account. For more on this change, read our story about how it works and why we did it.

Only trusted comments are displayed on this page. Untrusted comments have expired from this story.

No trusted comments have been posted.