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Crown cuts Macau presence further

AAP logoAAP 15/12/2016 Prashant Mehra

Casino giant Crown Resorts is further reducing its interests in its Macau joint venture, signalling a move closer to a total exit from Asia's largest gambling hub.

A day after the James Packer-controlled gambling group announced it would sell half its interest in Melco Crown Entertainment (MCE) to joint venture partner Melco International Development, Crown said on Friday it will sell a further 2.8 per cent.

Crown will now raise $1.9 billion from the sale to Hong Kong-based Melco International, headed by Lawrence Ho, instead of the $1.6 billion from Thursday's deal announcement.

Crown has also entered into a cash-settled equity swap for a further 5.5 per cent stake in MCE, effectively guaranteeing it a minimum future sale price of $US5.33 per share in the joint venture if the price falls below that level.

As a result of Friday's share deal, Crown will increase the scale of the special distribution and buyback that will follow.

Crown will now lift the amount of its special distribution to $600 million from $500 million, with its share buyback now estimated at $500 million from $300 million.

Macau once led the way in Crown's plans for Asian expansion but in recent years, gambling revenue generated in the former Portuguese colony has fallen because of slow economic growth in China and the Chinese government's anti-corruption campaign.

Crown is also still dealing with the arrests of 18 of its employees in China in October.

CMC Markets chief analyst Ric Spooner said the prospects of the Macau market for Crown appeared to be quite different now from what they were two years ago."

"Their strategy seems to be that this may not be the time for growth, this might be the time for consolidation," he said.

Crown had revealed on Thursday it will also not proceed with its Alon casino development project in Las Vegas.

Crown shares reacted positively to Friday's announcement, with the stock closing 1.1 per cent higher at $11.49.

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