Oaktree Sends In Revised Proposal To Crown Resorts To Buy Out James Packer
Australian based casino operator, Crown Resorts has confirmed that it has received a revised proposal from U.S based Oaktree Capital Management to buy-out all of the shares owned by former chairman and CEO James Packer.
Oaktree which is a global asset management firm sent in its first proposal to buy-out majority shareholder James Packer’s stock back in April 2021. The proposal offered to give Crown Resorts up to A$3 billion in funding to acquire all of Packer’s shares. Crown Resorts did not provide any official decision as to whether it accepted or rejected the offer.
We are not sure if Crown Resorts communicated privately with Oaktree but the U.S. based firm decided to send in a revised offer which looks a lot more attractive. The new offer is to purchase the 9.9 percent stake that Consolidated Holdings owns in Crown Resorts.
Consolidated Holdings is a company that belongs to James Packer and Oaktree is now offering to pay A$3.1 billion to complete the acquisition that will allow it to own nearly 10 percent of Crown Resorts. The proposal will see Oaktree provide a private loan of A$2 billion and the remaining A$1.1 billion will come via a convertible loan that can be translated into shares.
ABC News (Australia)
The loan will carry with it a 6 percent rate for the first 7 years and thereafter go up to 6.5 percent. The convertible loan clause gives Oaktree the option to exchange A$1.1 billion for new Crown shares after a 12 month period with a share price value of A$13 per share provided the share price of Crown Resorts at the time is over A$13. The current value of Crown Resorts shares is just over $A12.
Crown Resorts said that it will need time to look at the revised Oaktree proposal to discuss the pros and cons attached to it and then make a decision. No timeframe has been given as to when a decision might be expected.
Crown Unlikely To Accept Proposal
While Crown Resorts has not given any indication as to which side it would lean with regards to the new revised proposal from Oaktree, market analysts believe that the revised offer is still not attractive enough for Crown Resorts to bite.
If Oaktree does acquire the 9.9 percent stake of Packer, they would then become the majority shareholder and be able to block future takeover bids. Crown Resorts is currently reviewing a takeover bid from rival Star Entertainment and is yet to make a decision on the proposal.