The more conservative financial profile currently being maintained by Australian casino operator Crown Resorts Limited should reportedly allow the firm to better weather the anticipated slow start to business for its coming Crown Sydney development.
According to a report from Inside Asian Gaming, this is the opinion of global credit rations agency Fitch Ratings as it yesterday reaffirmed the casino company’s ‘BBB’ evaluation based primarily on the largely promising domestic outlook for its existing properties in the cities of Perth and Melbourne.
Crown Resorts Limited is spending approximately $1.5 billion so as to bring its 75-story Crown Sydney venue to the harborside Barangaroo district of Australia’s largest city. The firm earlier detailed that it is hoping to be able to open the New South Wales property by the end of this year complete with 350 hotel rooms as well as a VIP-facing casino featuring a selection of almost 500 gaming tables offering baccarat, roulette and blackjack entertainment.
However, the source reported that the six-star development will reportedly be born into a local casino landscape that has recently been ravaged by coronavirus-related shutterings while a deal the local government worked out with rival operator The Star Entertainment Group Limited in May is to prohibit it from offering electronic gaming machines until at least 2041.
Nevertheless, Fitch Ratings reportedly explained that Crown Resorts Limited has positioned itself to ride out this anticipated rough start after showing a ‘commitment to maintaining its balance sheet strength’ via the waiving of a final dividend and the recent acquisition of over $700,000 in new debt facilities ‘to manage through the disruptions and to meet its obligations.’
Reportedly read a statement from Fitch Ratings…
“Crown Limited’s ability to absorb the effects of the shutdowns, continue funding the construction of its Crown Sydney property and return its leverage to within the guidelines for its rating within one year benefitted from the conservative financial profile it maintained since it exited its international businesses. This headroom will also allow Crown Limited to absorb the expected slower start at its Sydney premium casino as VIP demand remains subdued given restrictions on international travel and the recession in Australia over the next couple of years.”
Although Crown Sydney’s expected coming reliance on high-value foreign visitors may pose a risk in the current coronavirus-ravaged climate, Fitch Rating reportedly moreover pronounced that this strategy could ultimately prove beneficial as its Crown Melbourne and Crown Perth compatriots have largely become domestically-focused following the 2016 arrests of 16 company employees by police in China.
Fitch Ratings reportedly declared…
“Border restrictions in place to combat coronavirus will see VIP revenues remain low over the foreseeable future. Nevertheless, this volatility has minimal effect on the group’s overall results because VIP revenues made up less than 25% of normalized group revenues from 2016.”