Bets on a Scandal-Plagued Gambling House Are Piling Up – The Wall Street Journal

The fight for the crown jewel of the Australian gambling scene is heating up. Even more could jump into the fray.

A bidding war for Crown Resorts has been brewing Down Under ever since an inquiry report, released by regulators in February, alleged that the casino operator has links with money laundering and people tied to organized crime. The watchdog later said Crown isnt fit to hold the gambling license necessary to open its new Sydney casino, housed in a skyscraper overlooking the citys harbor. The market has expected billionaire James Packer, who was criticized in the report, to eventually sell down his 37% stake in Crown, owned through his private firm Consolidated Press Holdings.

Oaktree Capital is upping the ante. The U.S. private-equity firm offered to lend 3.1 billion Australian dollars, the equivalent of $2.4 billion, to Crown to buy back shares owned by CPH, according to a stock-exchange filing Tuesday. Around one-third of the package is a convertible loan that could give Oaktree up to 9.99% of Crown. Oaktree first made a similar proposal in April.

But Oaktree isnt the only one trying to take advantage of Crowns crisis. Private-equity company Blackstone and Australian casino operator Star Entertainment have made offers to buy the whole company. Crown rejected Blackstones cash offer last month, saying it undervalued the company. The company has yet to decide on Stars share and cash offer, which is worth less but promises to deliver more value through cost savings of A$150 million to A$200 million a year.

Even though CPH reached an agreement with the regulators in April to neutralize most of its influence over Crown, a sale still seems likely. Under the agreement, CPH cant appoint nominees to Crowns board until October 2024 and cant talk to the company about its operations privately. Following the recent revelations, official investigations also are under way into Crowns existing casinos in Perth and Melbourne.

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Bets on a Scandal-Plagued Gambling House Are Piling Up - The Wall Street Journal