Australia’s Crown Ltd. is no longer planning to buy Cannery Casino Resorts, at least not now. However, the Australian gaming giant has replaced the former purchase agreement with a new agreement to make a substantial equity investment in the Las Vegas-based casino operator, and has retained the option to buy the company at a later date.
The agreement followed a contentious two weeks in which Cannery was threatening to sue Crown for trying to back out of its December 2007 agreement to acquire Cannery, which owns three Las Vegas casinos plus the Meadows racino in southwestern Pennsylvania.
The $1.75 billion sale had been approved by Nevada regulators, but hit a snag when Gretel Packer, Crown Chairman James Packer’s sister, joined with three unnamed investors to petition the gaming board to withdraw from the bid to purchase the Meadows racino, citing privacy issues due to Pennsylvania’s public disclosure laws. The original agreement was conditioned on the purchase of all four Cannery casino properties.
The solution to the problem was reached last month in an agreement under which Crown will pay Cannery a fee of $50 million in cash to terminate the former acquisition agreement, and will make a $320 million non-voting investment in Cannery Casino Resorts, with an option to acquire the operator should the regulatory issues be worked out.
Cannery officials were pleased with the outcome. “Today’s announcement puts CCR in an enviable position in the gaming industry with a strong balance sheet, ample liquidity, exciting new properties in Nevada and Pennsylvania, great growth opportunities and more certainty for our employees,” said Bill Paulous, who will now remain co-CEO of Cannery Casino Resorts along with Bill Wortman. “CCR will continue its tradition of excellence in serving local customers in Nevada and Pennsylvania with the highest-value gaming experience.”