ToCasino.net Online Casino

SYDNEY— Crown Resorts Ltd. intends to reduce its exposure to the Chinese market by selling part of its stake in a Macau casino operator, a move that comes as China is pursuing criminal charges against some of the Australian company’s employees on suspicion of gambling offenses.

Crown said it would raise 1.9 billion Australian dollars (US$1.4 billion) by selling shares in Melco Crown Entertainment Ltd. in two separate transactions, lowering Crown’s stake in that company to 11.2% from 27.4%. Crown said it plans to use the proceeds to reduce debt, fund a special dividend and pay for a share buyback.

Crown said Thursday it would sell a stake worth A$1.6 billion to Melco International Development Ltd., which is led by Melco Crown chief executive Lawrence Ho. On Friday, Crown said it is selling additional shares in a public offering to investors worth another roughly A$300 million. It also entered into swap transactions referencing about 5.5% of outstanding Melco Crown shares.

Macau, a special administrative region, is the only place in China where casino gambling is legal. It is now the world’s most lucrative gambling hub.

In October, China detained 18 Crown employees, including three Australians. At least one of the Crown employees who were detained has since been released.

The detentions sent Crown’s shares plummeting and raised concerns among investors that Chinese high-rollers would avoid Crown’s Australian casinos. Crown said Thursday that revenue for the first 23 weeks of the fiscal year fell 12% compared with a year earlier across its Australian resorts because of a reduction in VIP play, suggesting the arrests could be hitting the company’s profit.

The arrests in China, where gambling is illegal on the mainland and companies aren’t allowed to directly advertise their casinos, sent a chill through the global gaming industry and were seen as a broad warning to foreign companies not to run afoul of Chinese regulations. Among those detained was Jason O’Connor, Crown’s vice president of international VIP operations.

In the days after the detentions, Crown executives sought to reassure investors the company could withstand any fallout. At the company’s annual shareholder meeting on Oct. 20, Chairman Robert Rankin said the company respected Chinese laws and its employees were “entitled to a presumption of innocence,” according to a copy of his speech. The company also said that wealthy Chinese visitors in its international VIP program contributed about 12% of revenue in the most recent fiscal year, though the profit margin on that program is lower than on other businesses.

Casinos are becoming increasingly reliant on Chinese high-rollers, and Chinese tourism to Australia has risen in recent years. Crown is building a hotel and casino complex on Sydney’s waterfront predicated on attracting high-rollers from China and elsewhere, so a significant drop in VIP play could raise worries about the project’s viability.

Crown said VIP play in the first 23 weeks was down 45%, though main-floor revenue at its Australian resorts was flat and nongaming revenue was up 4%. Crown, part-owned by Australian billionaire James Packer, operates casinos and hotels in Melbourne and Perth.

Crown also said Thursday that it wouldn’t move forward with a plan to spin off some of its international assets into a separately listed company and that it wouldn’t proceed with a project in Las Vegas. The company said it is continuing to work on an initial public offering of shares in a real-estate investment trust that would contain some of its Australian hotels and retail property, though that plan is subject to final approval from the board and market conditions.

“These business decisions are strategic and for the long term, and will underpin the company’s future over the next decade,” Mr. Rankin said Thursday.

Andrew Pascal, the founder and co-chairman of Alon Leisure, which is developing the Las Vegas project, said his team remains optimistic about completing the casino-and-resort complex and is seeking other investors to support the initiative. Mr. Pascal, a former Wynn Resorts Ltd. executive, said if all goes well the resort would open in late 2019 or early 2020, later than the initial timeline of late 2018 to early 2019.

Aside from Crown, other investors in the project, envisioned as a boutique resort targeting higher-end travelers than other facilities on the Las Vegas Strip, include Oaktree Capital Management LP. Mr. Pascal said the complex would cost a little more than $2 billion and that he respects Crown’s decision to withdraw from the project.

“If we can’t go and get the project fully funded, it’s very likely it won’t happen,” Mr. Pascal said. But he believes “there are potential sources of funding. The team is totally committed and focused on doing whatever we need to do in order to realize the project.”

—Julie Steinberg contributed to this article.

Write to Mike Cherney at This e-mail address is being protected from spambots. You need JavaScript enabled to view it