Finance - Coronavirus Cancels Crown Sale
Hong Kong-based Melco Resorts says it is backing out of the deal to purchase more shares of James Packer's Crown Resorts, and the reason is the 2019-nCoV coronavirus outbreak.
The gaming and entertainment empire to Hong Kong led by tycoon Lawrence Ho has shelved their plans to purchase another ten percent of Crown Resorts, because of the drags on the core business caused by the severe drop in outgoing Chinese tourism and the shutdown of all Macau casinos. S&P Research says Melco "has limited flexibility to absorb a prolonged and severe decline in its cash flow" because it needs money to build an expansion to its Studio City casino in Macau.
"While Melco believes Crown has world-class assets that are complementary to its global business, it is Melco’s belief that, at this time, its capital needs to be deployed on its core assets," Melco said in a statement.
Last May, Melco agreed to purchase 20 percent in two trances. The first ten percent transferred in July. But a month later, Mr. Ho and Mr. Packer put the deal on hold until the end of the Bergin Inquiry into allegations of money laundering at Crown Casinos. Packer's company denies these allegations. By cancelling the seconds tranche, Melco will not seek a seat on Crown's board and therefore avoid scrutiny by Aussie regulators.