The once shining reputation of Crown Resorts in the Australian gaming scene now lays tarnished and scuffed thanks to a plethora of allegations of money laundering, war criminals, employee mistreatment, machine tampering, and more levelled at the company. Once a successful monolith, Crown Resorts has been reduced to scrabbling to save the sinking ship of its operations.
The corporation has woefully admitted that it may see itself losing obscenely large sums of money if credit rating agencies don’t start being more generous with their feedback. Unfortunately for Crown, the scales that it hopes will tip in its favour have been upended by the weight of its alleged transgressions.
The Guardian reported that Crown might have to repay more than AUD 175 million ($135 million) if increasingly unfavourable reports from rating agencies continue to pour in. Moody’s downgraded Crown to Baa3 last November, which is only one level from a ‘junk’ rating. Reports indicate that the agency is mulling a further downward rating, following the news that Crown has to face an inquiry by the New South Wales (NSW) Independent Liquor and Gaming Authority (ILGA) with its casino license hanging in the balance.
Moody’s recently declined to rate the $135 million debt that was offered as euro medium-term notes (EMTN). Crown has held these notes, which reportedly belong to a Japanese investor, for over 14 years. While Moody’s has shied away from the debt, both Fitch and Standard & Poor’s (S&P) have given it a rating of BBB, only two levels above junk.
If Fitch and S&P ultimately withdraw their ratings or list the debt as junk, the holder of the notes would be allowed to claim repayment. The claim could encompass the face value and interest that would have been paid from now up until 2036 when the debt would have matured. Crown appears to have the resources to cover the repayment, but this could cripple the progress on its numerous projects.
Crown’s projects are already potentially in peril, with their fate in the hands of the NSW inquiry. Moody’s has asserted that Crown’s future is almost entirely dependent on the findings of the investigation. In a communication from November 2020, the agency stated,
“We also view there to be an increasing likelihood of material downside implications from the escalating regulatory investigations Crown is facing. These could include large fines and/or changes to Crown’s licensing conditions in Sydney, with license loss being the most severe, although still unlikely, outcome. ILGA’s review also raises the potential for regulators of Crown’s operations in Victoria and Western Australia to undertake their own reviews, with possible negative consequences for Crown’s business in those states.”
