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Crown: No big changes for Cannery23 January 2009
LAS VEGAS, Nevada -- The top executive for Crown Ltd. told gaming regulators Thursday the Australian-based gaming company does not plan sweeping changes at Cannery Casino Resorts when it completes its purchase of the casino operator later this year.
"Upon acquisition, we propose to undertake a detailed review of their business operations, including detailed plans and budgets," said Rowen Craigie, Crown's managing director and chief executive officer. "Subject to that review, we have no plans to fundamentally change the operations in the short term."
The comments came before the Nevada Gaming Commission unanimously approved the $1.8 billion buyout of Cannery Casino Resorts in an all-cash transaction that will carry no debt.
"It's nice to see someone come in here with cash," Commission Chairman Peter Bernhard said. "It eases some of our worries in terms of financial viability of the operation going forward."
The deal won't close until it receives approval from regulators in Pennsylvania, where Cannery owns a racino outside Pittsburgh.
Craigie said Pennsylvania regulators are finishing their final interviews and Crown should appear before them in the next few months.
Absent from the meeting was James Packer, Crown's chairman and largest shareholder, with 38 percent of the company's stock. The shares trade on the Australian Securities Exchange.
Regulators did not require the 41-year-old Australian billionaire, who appeared before the state Gaming Control Board on Jan. 7, to appear Thursday.
Craigie told regulators a new, Las Vegas-based executive team will take over operations of the Cannery, which will be held as a subsidiary of Crown. Crown will have an office in Las Vegas. Craigie said the company already has hired a chief financial officer and is close to naming a CEO.
Although the CFO was hired from a Australian casino company, the short list of possible CEO's all have extensive backgrounds in U.S. casino operations.
Craigie said that experience will help Crown navigate the regulatory requirements in the United States.
"It would be fair to say the two frontrunners have extensive Nevada casino experience," he said. He did not mention the names of any of the candidates.
He also declined after the hearing to say when the new chief executive will be named, only saying "soon."
Crown, which owns or has joint venture in properties in Melbourne and Perth, Australia; the United Kingdom; British Columbia; Alberta; and Macau, will be entering the U.S. gaming market for the first time when the deal closes in the next few months.
Cannery founders and co-owners William Wortman and Bill Paulos will hold seats as directors of the new subsidiary, which Craigie said will help with the transition.
Craigie said Crown intends to keep the "family feeling" nurtured by Wortman and Paulos during the past few years.
"That is why we're glad to have the Bills' assistance in the transition," Craigie said after the hearing. "We're delighted they've agreed to come on board."
Most of the current management team members at the Cannery, Craigie told regulators, have expressed a desire to continue with the company after the buyout.
Craigie said the company "doesn't intend on making any major changes from the customers' perspective."
"But, if we can bring new ideas, like new marketing programs that customers have responded very well to elsewhere, we will," he said after the hearing.
The purchase of Cannery Casino Resorts provides Crown with recently built hotel-casinos that will have low construction and capital expenditure costs, Craigie said.
Cannery opened its second hotel-casino, the $250 million Eastside Cannery on Boulder Highway, in late August. Its first property, the Cannery in North Las Vegas, opened in 2003.
Although Crown will take over operations of both properties and the racino in Pennsylvania, a contract dispute with the landlord at the JW Marriott in Summerlin may prevent the company from taking over that casino.
Wortman and Paulos received approval from regulators Thursday to continue operating the casino through their company, Millennium Gaming, if an agreement cannot be reached between property and Crown.
Craigie told regulators that removing the Rampart casino from the deal would lower the cost of the buyout, but he did not say by how much.
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