Moody's says Crown's Nobu deal is credit negative

Sunday 1st of November 2015

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Moody's Investors Service said that Crown Resorts Limited's announcement that it has acquired a 20 percent interest in the international restaurant and hotel company, Nobu, for $100 million is credit negative, but has no immediate impact on its ratings.

"Crown's investment in NOBU is credit negative as it represents a new financial commitment at a time that Crown has an extensive pipeline of projects to be undertaken over the next four years,” said Maurice O'Connell, a Moody's VP and senior credit officer.

These projects include completion of a 500-room hotel in Perth, expansion into Sydney, investing in the Alon Las Vegas Project and, over a longer term, developing a hotel and apartment complex in Melbourne in conjunction with the Schiavello Group.

"At the same time, the substantial project pipeline coincides with lower expectations for increasing dividends from Crown's investment in Melco Crown Entertainment,” added O'Connell.

The outlook for a strong and sustainable rise in dividend income from MCE is negatively impacted by the sharp downturn in Macau gaming revenue, which in October was down 28.4 percent year-on-year.

The lower expectations for increasing dividends from Crown's investment in MCE places pressure on Crown's ability to increase debt materially within the parameters set for the rating.