Australia’s Crown Resorts warns may not continue as ‘going concern’

September 9, 2021

By Paulina Duran

SYDNEY (Reuters) – Crown Resorts’ auditor on Thursday warned that numerous money-laundering probes into the Australian casino operator and the impact of the COVID-19 pandemic cast “material” uncertainty over the company’s ability to continue as a going concern.

Crown has been embroiled in legal battles and scandal since allegations of money laundering at its Melbourne casino emerged in 2019. In June, financial crime regulator extended a probe into its flagship casino in Melbourne, to also include its operations in Perth.

The company in which billionaire James Packer has a 37% stake, also said the Australian Transaction Reports and Analysis Centre (AUSTRAC) was “very likely” to launch civil proceedings against its casinos in both cities.

“If it does so, it is likely that Crown Melbourne and Crown Perth will be required to pay significant civil penalties,” it said in its 153-page annual report released on Thursday.

KPMG, Crown’s auditor, also said the cancellation or suspension of any of its casino licences could trigger an event of default on some of its debts.

If that occurred, the report said Crown had negotiated some waivers with its financiers which would provide “a period of time to negotiate with lenders or otherwise refinance the facilities”.

Its bonds are also at risk of having to be repaid if its credit rating falls below investment grade, KPMG added.

“The conditions disclosed … indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern,” the auditor said in the report.

To address a potential liquidity shortfall, the company had also obtained a waiver of financial covenants from its banks until the end of the year, and extended the maturity of its banking facilities until October 2023.

Crown shares, which have fallen 26% since its 2019 highs, were 1.5% lower to close at 9.76 on Thursday, slightly overperforming a wider market that fell 1.9%.

(Reporting by Paulina Duran in Sydney; Editing by Emelia Sithole-Matarise)

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