Crown Resorts has confirmed a requirement under its Casino Management Agreement to sub-lease the casino at Crown Melbourne to a new operator should its license be revoked. However, the company argues that doing so would not be in the public interest and potentially trigger an event of default.
The Australian casino giant announced Wednesday that it has now filed all closing submissions with the Victorian Royal Commission, including a further written submission dated 9 August 2021 related to inquiries by Commissioner Ray Finkelstein around which areas of the Crown Melbourne complex may need to be sublet if the casino license was cancelled.
Finkelstein had suggested Crown may need to sub-lease not only the casino but also the main Crown Towers hotel.
In its additional submissions, Crown has confirmed that, as per its Casino Management Agreement, the state may only require Crown to grant a sub-lease of the Melbourne Casino to any new casino operator. This, it says, specifically refers to those areas of the Melbourne Casino Complex which constitute a casino and includes the areas in which money counting, surveillance, storage and other activities related to the conduct and playing of games are carried on.
In providing these additional submissions, Crown argues that cancellation of the licence followed by a requirement to sub-lease would not be in the public interest for the reasons referred to in Crowns Closing Submissions and would also have the very real potential to trigger events of default under Crown’s debt facilities.
Crowns lawyer, Michael Borsky, had argued during closing submissions on 3 August that the Commission should not assume that gaming and non-gaming operations can efficiently or even practically be separated.
The result, in our submission, of a disintegration of the integrated resort would be an inferior offering for customers, employees and stakeholders and a substantially diminished offering for the state of Victoria, he said.
In a recent note, Credit Suisse Australia said the value of Crowns Melbourne assets would plummet by more than AU$2 billion, from AU$3.75 billion as a going concern to AU$1.72 billion as components, if breaking them apart was required due to the company losing its Victorian casino license.