Crown Resorts hybrid securities tumble following privatization talk

Investors in ASX-hybrid securities issued by Crown Resorts have seen unexpected losses, largely as a result of talk James Packer is considering the privatization of the casino operator, the Sydney Morning Herald reports.

Crown’s two outstanding listed notes issues have declined by more than 10 percent since Packer considered privatization of the group, the Australian news website reported.

Should Crown be taken private, market analysts speculate that the transaction would be largely debt funded, increasing credit risk for investors.

However, analysts suggested that market speculation had run ahead of itself, given the sparse details on the privatization plans.

“Crown notes are trading assuming an adverse outcome should privatisation occur, however there has been no news flow or indication of such,” Evans & Partners’ Michael Saba was quoted as saying by the Sydney Morning Herald.

Mr. Packer has been in talks with private equity firms and sovereign wealth funds to raise part of the estimated $5 billion or more he would need to privatize the company.

In Dec. 2015, James Packer was reportedly in talks with a number private equity firms and pension funds about the possibility of taking his share of the company private. According to Bloomberg at the time, Packer was looking into the possibility of taking some of Crown’s casino resorts private, without specifying which.