Oaktree’s Structured Facility Bid to Crown Upped to AU$3.1B

Oaktree, a private equity firm based in the US, revised its initial offer to Crown Resorts related to the purchase of shares held by Consolidated Press Holdings (CPH), the troubled casino operator announced in a filing to the Australian Securities Exchange (ASX) Tuesday.

CPH Stake Buy Back

In April, the investment fund offered a funding commitment of AU$3 billion ($2.31 billion) via a structured instrument, a mix of equity and debt, the sale proceeds of which Crown would use to selectively buy back part or all of CPH’s 37% stake at the company.

The revised proposal in essence remains the same: Oaktree offers to lend money to Crown to finance the buyback and ousting of James Packer, a prerequisite for receiving its casino license in New South Wales (NSW), but this time the offer is upped to AU$3.1 billion ($2.38 billion).

Structured as a AU$2 billion ($1.54 billion) private term loan with a 6% coupon for the first 2 years and 6.5% for the remaining 5, and AU$1.1 billion ($847 million) of convertible debt that will allow Oaktree to convert it to shares after 1 year at a price of AU$13 ($10), provided that the share price at that moment exceeds the AU$13 ($10) price, the offer will put Oaktree on par with Blackstone Group.

Oaktree Seeks to Level with Blackstone

Such a transaction will be capped to allow the US private equity firm to acquire no more than a 9.99% stake at Crown Resorts with the rest being settled in cash, and level with the stake held by Blackstone Group, another bidder for the troubled casino company, which even saw its local rival, The Star Entertainment, table an all-stock AU$9 billion ($6.93 billion) offer.

“The Crown Board has not yet formed a view on the merits of the Revised Oaktree Proposal.”

Official Statement, Crown Resorts

None of the deals will go ahead until both royal commissions into Crown’s suitability to hold a casino license in Victoria and Western Australia complete.

On Friday, the Victoria government announced it would grant more time and resources to the royal commission into Crown’s dealings in the state to allow it to extend the investigation which already revealed some disturbing matters.

The state of Victoria reacted to the report released by the inquiry into Crown in New South Wales (NSW) where the commission found the casino operator unsuitable to hold a casino license due to significant failings related to money laundering practices.

Set up in February to assess Crown’s suitability to hold a casino license in Victoria and with an initial deadline of August 1, the royal commission now has until October 15 to report its findings. It also received an additional AU$9.75 million ($7.5 million).