Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On the 19 April, Oaktree <a href="https://www.smartkarma.com/compose/insight/53085/uyout%20Mr%20Packer%20via%20a%20%E2%80%9Ca%20structured%20instrument%20with%20the%20proceeds%20to%20be%20used%20by%20Crown%20to%20buy%20back%20some%20or%20all%20of%20the%20Crown%20shares%E2%80%9D%20held%20by%20his%20private%20company,%20Consolidated%20Press%20Holdings." target="_blank" rel="noopener">made</a> an $3bn unsolicited proposal to CWN's board via a then-undetermined debt/equity structure.
The transaction was geared to buy James Packer 37% stake in CWN via “a structured instrument with the proceeds to be used by Crown to buy back some or all of the Crown shares” held by his Packer's private company, Consolidated Press Holdings (CPH).
It was hardly a clean counter to Blackstone's cash Offer of <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02355769-3A563928?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">$11.85/share</a>. And questions remained as to size of the equity stake and the facility's interest rate. 
Blackstone subsequently increased its non-binding proposal for CWN by 4% on the 4 May to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02372885-3A566842?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">$12.35</a>. Shortly after, Crown's domestic rival <a href="https://www.smartkarma.com/entities/star-entertainment-grp-ltd" target="_blank" data-smartkarma-citation="entities:926:1" rel="noopener">Star Entertainment Grp (SGR AU)</a> lobbed a non-binding <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02372888_PS-3A566843?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">proposal</a>, by way of a Scheme, either via the issuance of 2.68 new Star shares for every Crown share, or a possible cash alternative of A$12.50/share, subject to clawback.
Crown summarily concluded  Blackstone's Offer <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02375134-3A567212?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">undervalued</a> the company, but it required <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02375140-3A567213?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">more information</a> from Star to finalise its decisions. There was no comment on Oaktree's offer.
<h3>The New News</h3>
This morning Oaktree <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02384403-3A568800?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">bumped its proposal/facility</a> to $3.1bn, incorporating a 2bn private term loan and a $1.1bn loan convertible into new shares. 
The facility would be used to selectively buyback CPH's shares in CWN.
The convertible would be convertible into new shares of CWN at A$13/share, with such conversion capped at 9.99% of Crown's outstanding shares.
It's an interesting proposition. Plus it sticks a $13/share handle out there.
More below the fold.

On the 19 April, Oaktree made an $3bn unsolicited proposal to CWN's board via a then-undetermined debt/equity structure.
The transaction was geared to buy James Packer 37% stake in CWN via “a structured instrument with the proceeds to be used by Crown to buy back some or all of the Crown shares” held by his Packer's private company, Consolidated Press Holdings (CPH).
It was hardly a clean counter to Blackstone's cash Offer of $11.85/share. And questions remained as to size of the equity stake and the facility's interest rate. 
Blackstone subsequently increased its non-binding proposal for CWN by 4% on the 4 May to $12.35. Shortly after, Crown's domestic rival Star Entertainment Grp (SGR AU) lobbed a non-binding proposal, by way of a Scheme, either via the issuance of 2.68 new Star shares for every Crown share, or a possible cash alternative of A$12.50/share, subject to clawback.
Crown summarily concluded  Blackstone's Offer undervalued the company, but it required more information from Star to finalise its decisions. There was no comment on Oaktree's offer.
The New News
This morning Oaktree bumped its proposal/facility to $3.1bn, incorporating a 2bn private term loan and a $1.1bn loan convertible into new shares. 
The facility would be used to selectively buyback CPH's shares in CWN.
The convertible would be convertible into new shares of CWN at A$13/share, with such conversion capped at 9.99% of Crown's outstanding shares.
It's an interesting proposition. Plus it sticks a $13/share handle out there.
More below the fold.

Crown Resorts (CWN AU): Oaktree's Intriguing Proposal

<ul>
<li>Back on the 8 March 2021, <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson (JM SP)</a> made a cash acquisition for the 15% of <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic (JS SP)</a>'s share capital it did not already own.</li>
<li>The US$33/share Offer price was arguably light. But with the amalgamation requiring 75% approval and Matheson providing an irrevocable to vote its 84.89% stake for the transaction, it was done.</li>
<li>On the 20 April 2022, the Bermuda Court dismissed Jardine's application to strike out dissenting shareholders who acquired shares after the Offer was announced. Last month, Jardine lost its appeal. </li>
</ul>


Back on the 8 March 2021, Jardine Matheson (JM SP) made a cash acquisition for the 15% of Jardine Strategic (JS SP)'s share capital it did not already own.
The US$33/share Offer price was arguably light. But with the amalgamation requiring 75% approval and Matheson providing an irrevocable to vote its 84.89% stake for the transaction, it was done.
On the 20 April 2022, the Bermuda Court dismissed Jardine's application to strike out dissenting shareholders who acquired shares after the Offer was announced. Last month, Jardine lost its appeal. 


Jardine Strategic's Dissentient Shareholders: The Sensible And Workable Approach

<ul>
<li>
<a href="https://www.smartkarma.com/entities/star-entertainment-group-ltd" target="_blank" data-smartkarma-citation="entities:926:1" rel="noopener">Star Entertainment Group (SGR AU)</a>'s announced it intends to raise $800mn after reporting a statutory $1.26bn 1H23 loss.</li>
<li>This equity raising will be broken down into a A$685mn non-renounceable entitlement Offer and a A$115mn institutional placement. The equity raising is fully underwritten. </li>
<li>Star also announced it has secured covenant relief through to June 2025. Star's immediate focus is to get its house in order and prove its suitability to hold casino licences. </li>
</ul>



Star Entertainment Group (SGR AU)'s announced it intends to raise $800mn after reporting a statutory $1.26bn 1H23 loss.
This equity raising will be broken down into a A$685mn non-renounceable entitlement Offer and a A$115mn institutional placement. The equity raising is fully underwritten. 
Star also announced it has secured covenant relief through to June 2025. Star's immediate focus is to get its house in order and prove its suitability to hold casino licences. 


IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/star-entertainment-group-ltd" target="_blank" data-smartkarma-citation="entities:926:1" rel="noopener">Star Entertainment Group (SGR AU)</a> scored an own goal by failing to provide an update on the balance sheet in the update on 13 February. The results are next week.   </li>
<li>There is a whirlwind of uncertainty surrounding potential fines and Star is in desperate need to recapitalise its balance sheet to avoid breaching covenants. </li>
<li>Our leverage scenarios suggest an equity raise of A$250-500 million is required. Despite the share price fall, we would steer clear until the details of its equity raise are disclosed.</li>
</ul>



Star Entertainment Group (SGR AU) scored an own goal by failing to provide an update on the balance sheet in the update on 13 February. The results are next week.   
There is a whirlwind of uncertainty surrounding potential fines and Star is in desperate need to recapitalise its balance sheet to avoid breaching covenants. 
Our leverage scenarios suggest an equity raise of A$250-500 million is required. Despite the share price fall, we would steer clear until the details of its equity raise are disclosed.


Star Entertainment (SGR AU): Entertaining Known Unknowns

Equity Bottom-Up

Star Entertainment Group / Equity Bottom-Up

<ul>
<li>In its earnings update, troubled Aussie casino operator <a href="https://www.smartkarma.com/entities/star-entertainment-group-ltd" target="_blank" data-smartkarma-citation="entities:926:1" rel="noopener">Star Entertainment (SGR AU)</a> said revenue was down 1% on pre-COVID levels, and expects FY23 EBITDA of $330mn-$360mn vs A$525mn in FY19.</li>
<li>But the big news was the possible $400mn to $1.6bn non-cash impairment charge in relation to disciplinary fines from regulators and new casino duties. </li>
<li>Shares tanked and are currently trading around a lifetime low. One for the brave or one to ignore?</li>
</ul>


In its earnings update, troubled Aussie casino operator Star Entertainment (SGR AU) said revenue was down 1% on pre-COVID levels, and expects FY23 EBITDA of $330mn-$360mn vs A$525mn in FY19.
But the big news was the possible $400mn to $1.6bn non-cash impairment charge in relation to disciplinary fines from regulators and new casino duties. 
Shares tanked and are currently trading around a lifetime low. One for the brave or one to ignore?


Star Entertainment: Imminent Fund Raising?

Australia

Crown Resorts Ltd. operates and manages gaming and entertainment facilities, bars, restaurants, nightclubs, cinemas and retail outlets. The Company also develops hotels and conference centre facilities.

Crown Resorts (CWN AU)