Australia’s top casino company Crown Resorts on Thursday said no charges had been laid against 18 staff detained for alleged gambling crimes in China, as shareholders gathered for a general meeting in the shadow of the legal crisis.
Ahead of the meeting in Perth, the Crown board endorsed long-standing plans to spin off some Australian hotels, a move designed to split the assets from its under performing businesses in the Chinese gaming hub of Macau.
But the arrest of the staff, including Crown’s Australian head of international VIP gambling, Jason O’Connor, in China last week was the primary concern for investors as the company’s shares hit a new 10-month low on Thursday.
“While I know we all have many questions, we must be very cautious and measured in our commentary at this sensitive time in the process. To reiterate, our immediate focus is the welfare of our staff and their families,” Chairman Robert Rankin told the meeting.
“We accept (China’s) jurisdiction and we respect their laws. However, at this time there have been no formal charges laid against our staff, the investigation continues and they are of course entitled to a presumption of innocence.”
It was too early to determine what impact the arrests would have on Crown’s business, he added, amid fears it will hurt the company’s ability to attract Chinese VIP gamblers to its Australian casinos, including a A$2 billion ($1.54 billion)resort under construction on Sydney’s harborside.
The staff, including three Australian nationals, were being held for unspecified “gambling crimes” and investigations were ongoing, China’s Foreign Ministry told Reuters on Monday.
Analysts have linked the detentions to Chinese laws banning casinos from advertising or promoting gambling in the Chinese mainland, such as offering credit to high-spending clients.
Melbourne-based Crown holds a 27 percent stake in Macau-based Melco Crown Entertainment Ltd. It does not directly run casinos in China but relies heavily on Chinese gamblers at its casinos in Perth and Melbourne.
The detentions sent Crown shares tumbling 14 percent on Monday and the sell-off continued on Thursday. Crown shares fell 3 percent in morning trade, while the broader S&P/ASX 200 index was flat.
The plan to spin off some Australian hotels is designed to split the assets from Crown’s underperforming businesses in the Asian gaming hub of Macau, which has seen VIP gambling revenue shrink amid a nationwide crackdown on corruption.
Crown said the spun-off unit would be listed as a new company on the Australian Securities Exchange and would include hotels in Melbourne and Perth. Meanwhile Crown would work on a broader demerger of its international businesses, it added.
“Such an IPO would support Crown Resorts’ ongoing capital management strategy and allow Crown Resorts to maintain a strong balance sheet and credit profile to fund existing development projects,” it said in a statement, without giving a timetable for the listing or a price guide for the assets.
Fund manager George Clapham, managing partner of Arnhem Investment Management, said the break-up – first mooted in June – would release value for investors.
“Splitting out of the international business and the domestic casinos I think makes sense,” said Clapham, whose fund owns shares in Crown.
It has also reignited speculation that majority shareholder James Packer may take part of the company private.