James Packer’s Crown Limited (ASX:CWN) has been given the green light by the NSW government for its VIP casino and six-star luxury hotel.
The NSW government has selected Crown’s proposal to proceed to the third stage of the government’s unsolicited proposal process for major projects. Crown’s success means competitor Echo Entertainment (ASX:EGP) is set to lose its exclusive casino rights from 2019, and Echo’s competing $1.1 billion proposal, which would transform The Star at Pyrmont into an integrated resort featuring two new luxury hotels, looks dead in the water.
Crown doesn’t have full approval to go ahead with its development, but now has the ability to begin negotiating a final binding offer with the state government, as well as a separate planning approval process. That will allow the public to offer their opinions on the project for the first time, which might be interesting, given the scathing views of architects and urban designers – who have widely panned both Crown’s and Echo’s proposals.
Crown’s plans include a 60 storey, 250m high tower, with multi-million dollar apartments, VIP gaming suites, restaurants and bars as well as luxury sun decks and pools. Crown has already signed a contract with Lend Lease Group (ASX:LLC) to develop the project, which will see a six-star hotel and VIP casino constructed at Barangaroo on Sydney’s waterfront.
Should Crown fail to get the go ahead after going through the third stage approval process, Echo could get another shot at retaining Sydney’s exclusive casino licence.
The news comes as a big blow to Echo, and a massive boost for Crown. In hindsight, it seems Mr Packer was confident that Crown would get its proposal approved when the company sold its 10% stake in Echo in early June.
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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.