Packer's Money On Gambling
The Age
Wednesday October 18, 2006
PUBLISHING and Broadcasting Ltd executives spent Monday putting the finishing touches to plans to spin off the company's media assets, but executive chairman James Packer was not orchestrating proceedings from his Park Street headquarters.
Mr Packer was on the Singaporean resort island of Sentosa, in a makeshift office, helping present his consortium's bid to build a $US3.5 billion ($A4.6 billion) casino/resort complex there. Physically, and metaphorically, Mr Packer was in the new world of gambling PBL is building for itself overseas while plans were being finalised at home to spin off what his father, the late Kerry Packer, once regarded as the family crown jewels. Mr Packer has already secured wins in Macau that will transform the company even if it loses out to one of the two rivals in contention to build Singapore's second casino resort. PBL, and its Asian partner Melco International, have three casino/resort properties under development in Macau, with funding requirements now estimated at $US3 billion. Just last week, PBL transferred the $US900 million licence it acquired early this year to its joint venture with Melco.The licence allows the partners to build and operate as many casinos in Macau as they like, giving them free rein in a market that is expected to overtake Las Vegas this year in gambling revenue. The figures give some idea of why PBL might need to spin off its media business and build a war chest. But given plans to float part of the Melco venture on the Nasdaq for $US1 billion some time next year - and the fact the venture has been successful at financing the projects with massive amounts of non-recourse bank debt - the media spin-off may indicate that there is more waiting in the wings.Broker UBS said yesterday it expected PBL would pursue opportunities in other countries that were now relaxing their regulations and allowing casinos. Japan, Thailand, Vietnam and Taiwan are considered the lead contenders. "A sale of the more mature media assets would give PBL the flexibility to pursue these other options," said UBS analysts Nola Hodgson and Simon Smiles. "However, if this is the primary motivating factor, we would expect there must be some additional larger-sized opportunities for PBL, as we believe that the group's current balance sheet is comfortably strong enough to fund the already announced plans." Russia is another emerging market where Mr Packer has been looking at gambling investments.PBL is also in the process of acquiring a British joint venture with Damian Aspinall from the Packer family's private company, Consolidated Press Holdings, for about $100 million. The venture has properties across Britain and is in contention to build a huge casino in Cardiff, Wales.
© 2006 The Age