Australian gambling giant Crown Resorts may be required to repay over AU$175 million in case its credit rating is still marked down by the credit rating agencies.
James Packer’s casino company is currently very dependent on selling apartments at the Barangaroo development in Sydney, with the money from the sales aimed to be used to shrink its debt load. The group’s financial difficulties come at a moment when everyone is holding their breath waiting for the final report from the inquiry that the authorities of New South Wales (NSW) held into Grown Resorts’ operations. The investigators are expected to present their inquiry report to the state’s Government by February 1st, 2021.
At the end of November 2020, Crown Resort’s credit score was reduced to almost the lowest one, Baa3, by the rating agency Moody’s Investors Service. At the time, Moody’s also indicated that it might reduce it even more as the state’s gambling regulatory body – the NSW Independent Liquor and Gaming Authority (ILGA) – put off the decision on whether the casino gaming floor of the company’s Barangaroo development could become operational.
The rating agency has explained that the future of the gambling company depends on the action that the NSW Government would take against it after receiving the report of the investigation.
Receiving the “below investment grade”, also known as a “junk” rating, would deteriorate Crown Resort’s positions, making it tougher and more expensive for it to borrow money.
Further Credit Rating Cuts Would Hit Gambling Giant’s Financial State Hard
The beginning of the week saw the Australian casino giant say that AU$175 million in debt, sold as EMTN (euro medium-term notes), were withdrawn from rating by Moody’s. As reported by The Guardian, the notes, which according to rumours have been subject to a sale to a Japanese investor, are also rated at BBB (two notches above junk) by a couple of other agencies – Standard & Poors and Fitch.
If both of them follow suit and downgrade their ratings into junk, or withdraw them, the investor could require the full amount of AU$175 million to be repaid, plus an extra “make-whole premium”. Such a payment would compensate the investor for the interest that they missed out in the period from the date the loan was called in and its due date in 2036. For the time being, it remains unknown how large this payment could be.
According to rumours, Crown Resorts would be able to repay both the note and the make-whole premium, but if it does so could mean it would have to raise more money for its other financial needs. The Australian gambling company is close to settling on apartment sales at its Barangaroo complex, with the move expected to help it quickly reduce its debt levels.
Back in 2020, Crown Resorts got a loan of up to AU$450 million to finalize the construction of the Barangaroo project. It has to pay the money back by the end of 2021.
- Author
Olivia Cole
