James Packer Scraps Cannery Casino Resorts Crown


James Packer Scraps Cannery Casino Resorts Crown Casino Deal - 13th March 2009
(Credit: Gambling911)


Australian billionaire James Packer has a $1.75 billion takeover of Cannery Casino Resorts LLC and sold his Australian cattle ranches to Guy Hands U.K. buyout company, Terra Firma Capital Partners Ltd. Packer's Crown Casino enterprise, Australia's biggest, rose 13.5 percent on the news. Had the deal gone through, Packer would have obtained three Nevada casinos and a racetrack near Pittsburgh.

The 41 year old Packer's fortune shrank to half this past year according to Forbes Magazine. Crown lost 56 percent of its value and the Las Vegas casinos are not faring that much better.

"Anyone who is looking to borrow to buy an asset, particularly one whose value was set before the economic meltdown, has not been viewed kindly by investors," said Sean Fenton, who manages about $324 million at Tribeca Investment Partners in Sydney. "Some investors have been waiting for a resolution to this deal before getting back into the stock."

Australian media has been especially hard on Packer as of late, claims Media Man Greg Tingle.

Insiders close to the James Packer situation almost universally agree that he appears to have made two main business mistakes," Tingle told Gambling911.com last week.... "The One.Tel telco fiasco in Australia back in 2001. One.Tel was a 1 billion dollar mistake. The other more recent mistakes being buying land based casinos in the Macau region (at top dollar), but James was not to know the ass would fall out of the market. Some analysts say some of the casino investments are worth next to nothing. Hang on, wouldn't James Packer be paying people good advice on what to buy, what not to, and how much to pay? Packer didn't have a luxury of a crystal ball.

"The good news for Packer and the rest of us is that history shows us that global recessions don't last forever, or do they? The global economy has been punishing Packer for the past few years and it's largely matters which are outside his control, so I think the Australian's press should give him a break and try to reflect a more balanced approach to journalism in regards to covering the business of being James Packer."

The Cannery deal was part of more than $3 billion of North American gambling-industry acquisitions Packer has made since inheriting Australia's biggest fortune when his father died in December 2005.

Cannery is controlled by Bill Paulos and Bill Wortman's Millennium Gaming Inc. and Oaktree Capital Management LLC.

According to Bloombert, Crown will pay a termination fee of $50 million, which may go up to $250 million if it doesn't get regulatory approval to call off the deal. The casino operator will also pay Cannery $320 million to subscribe for a preferred instrument that could be converted into a 24.5 percent holding.

Packer's company will have the option over a two-year period to buy the rest of Cannery on the same terms as the original agreement, the gambling company said in a statement today.

Crown scrapped the deal less than a month after posting a first-half loss triggered by writedowns to its U.S., Canadian and U.K. casino investments.

Packer slashed the value of stakes in Harrah's Entertainment Inc., Station Casinos Group and Aspinalls by 90 percent as recessions in North America and Europe curbed gambling demand.

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