James Packer’s investment is not needed to pay for a proposed expansion of its operations in Sydney, and the billionaire’s plan for a 60-story resort at Barangaroo appears to simply be a casino, said Echo Entertainment boss John Redmond.
As well as reacting to news reports in which Packer claimed Echo Entertainment was relying on his stake in the company to fund an expansion of its Star Casino, Redmond expanded on why he thinks Crown’s proposal for an integrated resort with limited gaming is not what it seems.
“There are other investors that replace him. So, obviously if he does not have an interest in owning the stock that’s his decision or Crown’s decision. But there’s others that do have an interest,” Redmond told Business Insider.
“It’s strictly a comment about their [Crown’s] interest in trying to build a facility here in Sydney that people don’t seem to understand is a second casino – because of its size and the amount of table games they will have inside that facility.
“Based on my experience, looking at the size of that [planned] facility, looking at the size of the footprint and reading into the comments they made, that’s a significant casino.
“Since we are the only facility that has table games, clearly it’s table games that define whether it is a casino or not. Because historically, you have all these slot machines – within 2km of this property alone, there’s 204 pubs, all of which have slot machines.
“The issue is not if it’s a casino because it has slots, it’s a casino because it has table games. The definition’s already changed with pubs and clubs having slot machines.
“When you have the size that’s being pushed over there, that’s a casino, that’s a significant casino. That’s not something small, that’s not a VIP boutique hotel, that’s a very, very significant casino,” Redmond said.
This comes after Redmond fired a salvo at Crown in a speech to a business lunch in Sydney on Tuesday, and the sale of Packer’s 10% holding in Echo, which forced shares in the company down to an all-time low.
Fund manager Perpetual, which already owned 5%, has upped its stake in Echo to 10.15%.
It bought shares the same day as Packer ordered the sale of his 10% stake at a discount, in a transaction brokered by UBS, according to documents filed with the Australian Securities Exchange.
Redmond, who has not met with Packer since a lunch also attended by Echo chairman John O’Neill in March, said financing an expansion of The Star without his investment would be “of absolutely no concern to us”.
“We have the ability to fund this out of organic cash flow, but that’s not our only option,” he said.
Echo has lodged its own plan to expand the Star and extend the period of its exclusive casino licence beyond its expiry date of 2019. NSW Premier Barry O’Farrell has said there can only be one casino in Sydney, with former Future Fund chairman David Murray tasked with reviewing proposals.
A Trojan Horse?
A source close to the licensing proposal process told Business Insider that while Packer may want a fully-fledged casino, concerns about public perception may have encouraged Crown to push it as a integrated resort.
“If you look at the plans it’s obvious they [Crown] want a full-blown second casino,” he said, speaking anonymously as both Crown and Echo are yet to lodge final proposals with the New South Wales Government.
“However, they know public support is not there, so they lobby it as something else and hope no one notices.
“If you look at the people who advise James Packer, it’s clear they are very poll-driven,” he said.
Brad Burden, a spokesperson for the NSW premier Barry O’Farrell, said in an email the plans released so far for Packer’s development at Barangaroo did not give any cause for the state government to reconsider his claims the development would be an integrated, six-star resort with limited VIP gaming facilities.
Comment has been sought from Crown.
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