The Crown Resorts Ltd (ASX: CWN) share price could come under pressure this morning after a late announcement on Thursday in relation to James Packer's planned share sale.
What did Crown announce?
On Thursday the company revealed that the NSW Independent Liquor & Gaming Authority has advised that it will be conducting an inquiry into the proposed sale of shares in Crown Resorts from James Packer's CPH Crown Holdings to Lawrence Ho's Melco Resorts & Entertainment.
At the end of May CPH Crown Holdings entered into a share sale agreement with Melco Resorts and Entertainment to sell a 19.99% interest for an aggregate purchase price of $1.76 billion. This reflected a price of $13.00 per share.
Mr Packer explained: "Crown has been a massive part of my life for the last 20 years and that absolutely remains the case today – my continuing Crown shareholding represents my single largest investment. I am still vitally interested in Crown's success as a world class resort and gaming business. The sale allows me to continue my long term involvement with Crown and at the same time to better diversify my investment portfolio."
However, this transaction is now looking uncertain. The release explains that the Authority looking into it under section 35 of the Casino Control Act 1992, together with various matters raised in recent media reports published by the Nine Entertainment Co Holdings Ltd (ASX: NEC), the Sydney Morning Herald, and the Melbourne Age.
It has also issued notices to relevant Crown parties and other parties compulsorily seeking documents and information which will assist it in its investigations and be used in the inquiry.
Why is there an inquiry?
The sale of Mr Packer's stake, which is yet to complete, has raised concerns due to ownership restrictions at Crown's casino project in Barangaroo, Sydney.
"The Authority is to have regard to the primary objects of the Act in exercising its functions. This includes ensuring that the management and operation of a casino remain free from criminal influence or exploitation, that gaming in a casino is conducted honestly and controlling the potential of a casino to cause harm to the public interest and to individuals and families."
The Authority intends to appoint the Honourable Patricia Bergin SC to conduct the inquiry, with Ms Naomi Sharp SC and Mr Scott Aspinall to be appointed as counsel assisting the inquiry.
What now?
If the NSW regulator blocks this share sale, Mr Packer may have to look elsewhere if he wants to offload his shares and diversify his investment portfolio.
And given the pull back in its shares since the original announcement, he may be lucky to get anything close to the $13.00 per share he agreed with Melco.
