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Melco stake sale eases Crown leverage concern, Fitch says

The sale of some of Crown Resorts’ stake in its Melco Crown Entertainment venture will help the Australian operator deleverage and boost its ability to execute its expansion plans, Fitch Ratings says.

Crown will receive about $800 million from the sale. The company also received an A$188 million special dividend from Melco in March.

Fitch estimates that Crown's pro forma net leverage based on its performance during the twelve months ended 31 December 2015 and after taking into account the proceeds from the share sale and special dividend from MCE, would have been lower than 1.5x; an improvement from 2.3x at 30 June 2015.

Crown’s pipeline through to June 2020 includes, the development of Crown Towers Perth, Alon Las Vegas, Crown Sydney and Queensbridge Melbourne.

Fitch expected leverage to rise during the construction phase, but to remain below 2.5x, the level at which it may consider negative rating action.

“This transaction is likely to lower the peak in Crown's projected leverage as it completes these expansions, the ratings agency said.

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