Fitch affirms Crown credit ratings

Crown Resorts’ credit ratings were reaffirmed by Fitch Ratings after the Australian operator announced plans to scrap a planned project to build a resort in Las Vegas and to sell down its stake in Melco Crown Entertainment.

Crown also said it will no longer pursue a demerger of its international assets, which it had announced in June.

Fitch said the long-term issuer default rating and senior unsecured rating remain at BBB with a stable outlook.

The company will receive about A$1.9 billion from the Melco sale, of which around $800 million will be used to reduce net debt; around $600 million will be paid as a special distribution to shareholders and around $500 million will be used to fund a share buyback.

“The affirmation of the rating reflects Fitch’s view that these actions will not significantly impact Crown’s business profile. The decision not to proceed with Alon and the sale of the 16.2 percent stake in MCE reduces Crown’s international exposure to a level similar to that under the demerger plan,” the agency said.

Fitch said it now expects Crown’s net leverage to peak at around 2.1x in FY20, compared with around 2.9x prior to the sale of the MCE stake.

The company now has two major developments in the pipeline: the ultra high end Crown Sydney and the Queensbridge Tower. Fitch notes that Crown’s Melbourne and Perth-based properties contributed nearly 90 percent of revenue in 2016.

“We believe these properties will remain resilient to changes in domestic and global macroeconomic environments, supporting the stable outlook,” it said.