Crown on Rating Watch Negative: Fitch

Saturday 18th of June 2016

Fitch Ratings has placed Australia-listed Crown Resorts IDR and unsecured rating of ‘BBB” on “Rating Negative Watch” after the operator said it would pursue a demerger of its international assets.

The rating agency made the announcement in a media release on Friday, in response to the June 15 announcement from Crown who was considering “major initiatives to enhance shareholder value.”

As well as potentially pursuing a demerger of certain international investments into a separately listed holding company, the operator said it also intends to “adopt a new dividend policy to pay 100 percent of normalized net profit after tax, effective immediately”, and to “explore a potential IPO of 49 percent interest in a property trust, which would own Crown Resorts’ Australian hotels (excluding Crown Towers Melbourne)...”

The rating agency said that these new initiatives “will lead to a weakening in Crown's credit metrics, particularly as the company has a significant capex pipeline for its Australian casino assets. The proposed demerger will see an increase in Crown's geographic concentration, although Fitch notes the strength of its assets in Melbourne and Perth.”

However, the demerger remains subject to further approval from Crown's board and shareholders, and government and regulatory bodies, says Fitch.

Rating Credit Demerger Assets