Crown Resorts to spin-off Macau underperformance

Australian company Crown Resorts is mulling establishing a new quoted company to house some of its domestic assets, in a bid to protect their value being dragged down by a lengthy downturn in China gambling hub Macau.

Gaming billionaire James Packer's Crown said in a statement that it might spin-off its international investments into a separate listed holding company -- known as InternationalCo -- and was also considering setting up a listed property trust to part-own its Australian assets.

"The board has for some time been looking to address what we believe to be a material undervaluation by the market of Crown Resorts' assets, due to a traditional consolidated (or amalgamated) structure," said chairman Robert Rankin.

"In particular, we believe that Crown Resorts’ extremely high quality Australian resorts are not being fully valued and the Crown Resorts share price has been highly correlated to the performance of its investment in Macau."

Rankin added the proposed demerger reflected the different nature of Crown Resorts' controlled Australian operating assets from its international investments.

It would provide investors with greater investment choice and transparency on the underlying quality of all of Crown Resorts' assets, he said.

Assets to be held in InternationalCo included Crown Resorts' 27.4% stake in Macau casino operator Melco Crown
Entertainment, valued at about A$2.7bn.

It would also include Crown's investment in the Alon development site in Las Vegas, 20% holding in Nobu, 50% slide of Aspers and investment in Caesars.

Of the company holding the Australian assets, Crown said it would explore a potential initial public offering of a 49% stake, with it retaining 51%. The property trust would own Crown's Australian hotels, barring Crown Towers Melbourne.