Crown Resorts Ltd. will no longer pursue a demerger of its international investments and will instead sell a stake in the listed Melco Crown Entertainment Ltd. for roughly A$1.6 billion.
Melco International Development Ltd. has agreed to buy 198 million shares representing a 13.4% stake in Melco Crown at US$6.00 apiece. The share sale is expected to be completed in the next few months and will effectively lower Crown Resorts' stake in Melco Crown to 14.0% from 27.4%.
Melco Crown, in a separate release, said that the agreement, subject to the approval of Macau regulators, will boost Melco International's stake in the company to 51.31% from 37.89%.
Crown Resorts said that it will use proceeds from the sale to reduce its net debt by approximately A$800 million, fund an estimated A$500 million special distribution to shareholders, and to launch an approximately A$300 million share buy-back program.
The company is also not moving forward with a development project dubbed Alon in Las Vegas, U.S. After an "extensive review of funding alternatives" conducted over the last two years, Crown Resorts said it will explore options for the asset, including the possibility of an outright sale.
The canceled project and Melco Crown stake sale are "prudent" alternatives to the proposed demerger, Crown Resorts CEO Rowen Craigie said in a statement. The demerger is part of a three-point plan to enhance shareholder value, with the other two involving creating an A-REIT and a new dividend policy.
Crown Resorts' plan to list some of its Australian hotels and associated retail properties is expected to push through.
Melco Crown is listed on the Nasdaq Global Select Market.
As of Dec. 14, US$1 was equivalent to A$1.33.