Sydney. Australia's Crown Resorts quit its remaining stake in Macau-focused Melco Resorts and Entertainment for $1.16 billion, ending a fraught offshore expansion and freeing up cash for new projects at home.
The biggest listed casino firm outside China has been retreating from a decade-long foray into the global gaming hub since 18 staff were arrested for "gambling crimes" in China last October amid a broader crackdown on corruption.
Its final exit from the one-third stake it held in Melco a year ago allowed the company to focus on new projects in Sydney and Perth.
Crown has booked a loss on joint ventures including Melco every year since 2010, according to Thomson Reuters data.
"The issue of the arrests has [...] been a major factor in terms of considering what's best for the future," said Angus Gluskie, a portfolio manager at White Funds Management, which owns Crown shares.
"I think they just wanted to step completely clear of anything to do with that market."
Melco said in a statement it would buy the Crown shares for a total $1.16 billion.
Crown shares were up 1 percent on Tuesday (09/05) while the broader Australian sharemarket fell 0.5 percent. After plunging 14 percent the day the company disclosed the arrests in October, the shares only returned to their pre-arrest level last month.
Crown did not immediately respond to requests for comment about whether the arrests had anything to do with its Melco exit.
In a statement to the stock exchange it said it would use the sale proceeds – totaling $987 million after unwinding equity swaps associated with the joint venture – to cut debt.
"I don't think there's an urgency in terms of cutting down their debt ratios, but they do have some pretty significant capex in the pipeline, particularly with Crown Sydney," said Vicky Melbourne, a senior director at Fitch Australia, which has Crown with a "BBB" credit rating with a stable outlook.
Crown's departure from Macau comes after gambling revenues in the southern Chinese territory grew in the first half of fiscal 2017, reversing three years of declines.
Visitor numbers are up as new resorts helped draw high rollers and casual gamblers to China's only legal casino hub, following an easing of President Xi Jinping's campaign against shows of wealth by public officials.