Australian casino operator Crown Resorts Ltd (ASX: CWN) has entered a trading halt this morning, after announcing a number of initiatives with regards to its Macau joint investment with Melco International.
Specifically, Crown is selling 13.4% of its stake in the Melco Crown venture in Macau and expects to realise $1.6 billion from the sale. The money will be divided up with $800 million going to debt repayment, $500 million being paid as a special dividend to shareholders, and a further $300 million to be used to buy back Crown shares.
Crown has also decided not to proceed with the Alon project in Las Vegas, and as a result, will not demerge the company's international interests. Crown intends to go ahead with a 49% divestment of its Australian hotels and retail properties (not the businesses) in the form of an Initial Public Offering – forming a new company and selling it to investors.
After the divestment, Crown will retain a 14% stake in Melco Crown. The company has entered a trading halt for the next few days while it investigates options for its remaining stake in Melco.
Foolish takeaway
Management stated that Crown had followed these initiatives in order to realise value for shareholders in a timelier manner than would have happened if it had demerged its international division. It's hard to argue, as today's sale suggests Crown's whole stake in Melco Crown would be worth about $3.2 billion.
For a company with an $8 billion market cap, this reflects a significant change in its structure, and will allow management to concentrate on Crown's core assets – as well as significantly reducing debt. Crown is worth a closer look today.
