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Crown Resorts receives AUS$3bn funding proposal from Oaktree

| By Robert Fletcher
Australian integrated resort operator Crown Resorts has received a proposal from alternative investment management firm Oaktree Capital Management to provide up to AUS$3.0bn (£1.67bn/€1.94bn/US$2.32bn) in funding for a share buy-back programme.
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Crown said the funds would be used to buy back some or all of its shares from investment holding business Consolidated Press Holdings (CPH), which currently holds approximately 37% of all shares in the operator.

According to Crown, the proposal is unsolicited, preliminary, non-binding and indicative proposal, and would be subject to shareholder approval, with no votes needing to be cast in favour by CPH or its associates.

Crown added that it is yet to form a view on the merits of the proposal, with its board now set to commence a process to assess the offer, while the operator also said there is no certainty the offer will result in a transaction.

The proposal was submitted from a company on behalf of funds managed and advised by Oaktree Capital Management.

The offer comes at a time when Crown is thetarget of a takeover bid from private equity giant Blackstone. Last month, Blackstone offered AUS$8.02bn to acquire the remaining 90.1% of shares in Crown, having already acquired 9.99% of the business in April 2020.

Last week, it was revealed that Blackstone had altered its bid to acquire Crown, so that the deal would not go ahead if either of Crown’s existing licences are suspended or its New South Wales licence is not granted.

In its new bid conditions, Blackstone made clear that suspension, revocation or failure to receive a licence in its New South Wales, Victoria or Western Australia would be grounds to cancel the deal. The operator was the subject of an inquiry in New South Wales found that Crown was “unsuitable” to operate a casino in the Barangaroo district of Sydney, though it may still receive a license if it undergoes some changes. This report then prompted inquiries in Victoria and Western Australia, where Crown already operates.

Blackstone may also withdraw its bid if “any of the gaming regulatory authorities imposes terms or conditions on Crown or any of its current or foreshadowed casino licences or framework agreements which, when combined, constitute a material adverse change” to Crown’s business, or if the regulators signal that such conditions are likely.

However, if none of these conditions to cancel the deal arise, the acquisition is expected to close in the third quarter of 2021.

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