- »Crown’s Resorts Credit Rating Has Been Downgraded
Crown’s Resorts Credit Rating Has Been Downgraded
Crown Resorts’ credit rating has been lowered by Moody’s Investors Service.
Casino.org reports that Crown’s rating has been revised to “negative” as the Australian gaming company faces increasing regulatory pressure.
The ratings agency issued the new outlook on March 1.
It was the same day Crown Perth chairman John Poynton left the company.
Poynton is the third James Packer loyalist to depart the casino operator over the past several months, following Michael Johnston and Guy Jalland.
In a report issued in February, former NSW Supreme Court judge Patricia Bergin lobbed criticism at Packer’s looming influence at Crown, although the billionaire hasn’t occupied a board seat since 2018.
She noted director appointments to those loyal to him made the board less independent and represented conflicts of interest.
The call for a “negative” outlook ends a periodic review of Crown initiated by Moody’s last November.
“The rating confirmation reflects our view that Crown has good potential to maintain its investment-grade credit profile and is willing and able to remediate shortcomings identified by the Bergin inquiry in NSW, as well as any additional shortcomings that may be identified by regulatory investigations in other states,” analyst Maadhavi Barber said.
Barber adds the negative outlook is born out of the fact that the steps Crown needs to take to reach suitability to operate a Sydney integrated resort are “far-reaching and complex.”
Crown recently opened the $1.7 billion Crown Sydney.
But regulators in NSW found the company unfit for licensing in that region, following a broad report on the operator’s slack anti-money laundering practices.
“Crown is the subject of a number of other investigations. The State of Victoria is holding a royal commission into Crown’s suitability to hold its Melbourne gaming licence and the Gaming and Wagering Commission of Western Australia has recommended an independent inquiry regarding Crown Perth’s operations,” said the research firm.
“Nevertheless, Moody’s notes that the adverse findings of the Bergin Inquiry are in connection with Crown’s pre-existing operations in Victoria and WA, and the rating agency, therefore, expects that findings and recommendations from the other inquiries will be largely in line with those of the Independent Liquor and Gaming Authority.”
Moody’s added that financial burdens related to the inquiries are likely to be “incremental’ and that the gaming company is already taking steps to address shortcomings.
Crown Resorts’ failure to open could spell trouble for NSW government accounts
The repercussions of Crown Resorts being unable to open its casino in Barangaroo is set to have big repercussions on the New South Wales government’s coffers.
The Sydney Morning Herald reported in February that NSW is already preparing to take a $190 million hit in casino tax revenue as a result of the coronavirus border closures, with budget forecasts showing it would take several years to recover that revenue.
If the James Packer-backed group is denied a licence or another company doesn’t take over the under fire casino, the government faces as much as $400 million in lost tax revenue.
This comes as a number of high-profile directors have left their Crown posts, including Andrew Demetriou, who resigned after gambling regulators in Victoria and NSW pushed him and Crown boss Ken Barton to leave after being heavily criticised in an inquiry that found the company unfit to run a casino.
The independent Bergin inquiry found that Crown Resorts is unfit to hold a casino licence in NSW, with a scathing report released this week confirming Crown had “facilitated money laundering”.
Gambling regulators in NSW and Victoria earlier took aim at Mr Barton and Mr Demetriou for their refusal to resign after being heavily criticised in the report.
Victorian Commission for Gambling and Liquor Regulation chief Catherine Myers said on Thursday she would demand the pair explain why they should be allowed to be involved with the group’s flagship Melbourne casino.
That came hours after her NSW counterpart, Independent Liquor and Gaming Authority chair Philip Crawford, said that Crown needed to part ways with Mr Barton and the former AFL boss Mr Demetriou if it ever wanted to open its new casino at Barangaroo.
Former Supreme Court judge Patricia Bergin found that Mr Barton was “no match for what is needed at the helm of a casino” and called Mr Demetriou’s appearance at her public inquiry “unedifying”.
Mr Crawford said there was no guarantee Crown would be able to make itself suitable to open the new casino in NSW.