China slowdown risks thinning
Packer Vegas takers
A report by Credit Suisse AG on Tuesday said China's economic slowdown may have "reduced investor interest" in Alon Las Vegas. Casino Hotel Alon, led by Australian businessman James Packer and former Wynn Resort Company executive Andrew Pascal, is planning a site at the northern end of the Las Vegas Strip.
Mr Packer is the executive director of Australia-based Crown Resorts Ltd, an investor in Asian casino developer Melco Crown Entertainment Ltd. He also co - chairs the melco crown.
Las Vegas Strip's casino plan was described in media reports in an attempt to attract Chinese and other Asian gamblers.
"The risk of increased Crown equity has increased," Credit Suisse analysts Larry Gandler and Ben Levine said in their report, referring in part to the cash Crown Resorts must seek to pursue Alon.
"Recently, Crown's consolidated media holdings [Ltd's shares] rose 3% to 53.1%, and Crown's sale of shares in the Las Vegas corporation Alon appears to be taking longer than expected. "China's slowing economy may have reduced investor interest in Alon," the Credit Suisse team added.
Consolidated Press Holdings is an investment holding company based in Sydney, Australia, founded in 1954 by Mr Packer's father, Kerry Packer.
A note from JPMorgan Securities in October said Alon Las Vegas is expected to require an A$1 billion ($711.6 million) stake in Crown Resorts under the project's current ownership structure.
Crown Resorts said the Alon project could cost a total of $1.6 billion to $1.9 billion. Credit Suisse said it expects the project to reach a "high cost estimate" given the additional operating capital for casino planning."
"Assuming Crown can raise a $300 million stake to fund Alon, a potentially $1.9 billion casino project, Crown will not meet its leverage ratio target," Credit Suisse analysts said on Tuesday.
They added that Crown Resorts should keep its connected group leverage below 2.5x before interest, taxation, depreciation and amortization (EBITDA) to maintain a BBB "stable" credit rating.
Credit Suisse said it included Crown Resorts' recent announcement to acquire a 20% stake in restaurant and hotel company Novu Hospitality LLC for $100 million in its leverage model.
overall balance sheet
In a note on Oct. 21, JP Morgan said Crown Resorts' balance sheet is now "full" due to a pipeline of new casino projects, including an extension of Crown Sydney, Crown Melbourne and plans to invest in Las Vegas resorts.
Crown Resorts also has a venture with Hong Kong-listed Melco International Development Ltd to develop casinos in Asia through Nasdaq-listed Melco Crown. Mr. Packer attended the opening ceremony of the $3.2 billion Studio City Game Resort in Macau on Oct. 27. The resort is 60% owned by Melco Crown.
Credit Suisse said on Tuesday, "It may be prudent for Crown to raise its stake and protect its credit rating, given the pervasive risks associated with Macau EBITDA, Crown Sydney budget, Las Vegas budget and Australian VIP [gambling] earnings. Crown was able to issue A$430 million of new shares without diluting Consolidated Press Holdings below 50.1%. In December 2008, crown issued a new A$300 million stock to strengthen its credit rating."
In mid-November, Vegasinc , an online media outlet linked to the Las Vegas Sun newspaper, reported that the task force was at the Alon Las Vegas site. 슬롯
According to a document submitted to Clark County Planning Department earlier this year, the hotel will have 1,100 rooms. The property's game floor was proposed for 27,776 square feet (2,580 square meters), according to documents cited by Credit Suisse.
"Our estimates show that this game floor and related salons can accommodate about 600 slot machines and about 150 tables," Mr. Gandler and Mr. Levine said.