CROWN LETTER TO GOVT WARNS OF NEGATIVE IMPACT FOR INDUSTRY
Questions have been raised over the reform agenda of embattled Australian casino giant Crown Resorts after it was revealed the company wrote to the Victorian government earlier this month seemingly seeking assurances around potentially damaging findings that could arise from the Royal Commission into Crown Melbourne.
Details of the letter, addressed to Minister for Consumer Affairs, Gaming and Liquor Regulation Melissa Horne, were made public on Friday and show Crown warning the government that any revocation of its casino license would result in significant loss of employment and negative impact on the state’s casino industry.
Dated 2 July 2021, just days before Crown board members and senior executives took the stand, the letter has been criticized for seeking to undermine Victoria’s Royal Commissioner Ray Finkelstein.
The possibility of Crown having its casino license revoked has long been considered the most unlikely extreme but has been given fresh impetus by recent revelations around the company’s responsible gambling compliance and calculation of gaming taxes.
Those concerns seem to be reflected in Crown’s letter which warns it would likely breach lending covenants around an outstanding AU$420 million bank facility and trigger a put option on AU$180 million in Euro Medium Term Notes.
Such an event of default (EOD), Crown writes, “may have severe consequences for Crown and all its stakeholders. This will impact on Crown’s shareholders, employees, unions, trade creditors, patrons, the hotel precinct and the Melbourne tourist industry.”
The letter goes to great pains to outline the impact an EOD would have on employment, stating, “Crown Melbourne is the state’s largest single site private employer. An EOD may result in loss of employment or severe threat of loss of employment.
“Crown directly and indirectly employs 11,597 people, over 11,000 of whom are below management level and almost 5,000 of whom are direct EA covered employees. Most of the employees are disconnected from and have not directly or indirectly contributed to the failures of Old Crown and through COVID-19 they have suffered through significant uncertainties. They will suffer greater uncertainties if there is an EOD.
“An EOD may also provide potential overseas suitors an opportunity to take advantage of the situation.
“It is not in the public interest for Crown to fail.”
Crown, whose letter repeatedly compares its current state to what it calls “Old Crown”, also warns that loss of license would likely see merger and acquisition offers from Star Entertainment Group, The Blackstone Group and Oaktree Capital withdrawn, and that “a change in control through the acquisition of shares will not of itself address the issue of suitability and accelerate the cultural change underway.”
Crown is due to hold a senior leadership forum this Thursday 15 July where around 60 members of senior management and rising stars will explore opportunities to improve the corporate culture.
The company has farewelled seven directors and announced multiple new hires around its AML and responsible gambling teams since February’s Bergin Report but said in its letter to government it was ready for further change if required.
“The board of Crown acknowledges that the Commissioner may make adverse finding against Crown’s current executives and employees,” it said. “The board of Crown will give serious consideration to terminating the services of any executives or employees against whom material adverse findings are made by the Commissioner, as soon as practicable having regard to its continuing obligations as a licensee and a public company.”
Royal Commissioner Finkelstein is due to hand down his findings by 15 October.
