After amendment of a clause which restricted buybacks prior to 14 September 2017, Crown has announced it has purchased series 1 notes (ASX code: CWNHA) with a total face value of $8,279,100 as at 10 March 2017. The notes have a call date in September 2018 and while securities are typically redeemed on this date by convention, Crown has decided to put the proceeds of sale of its Macau casino interests to use. It intends to buy back some of its ordinary shares and one of its two series of ASX-listed notes.
According to Westpac calculations, Crown will see its net debt decline by around $265 million from about $1.2 billion to below $1 billion. The reduction in debt is only half of the face value of the outstanding notes as credit agencies have allowed Crown to treat the hybrids as half equity, a product of the notes’ final maturity date in 2072.
Crown has also reported its major shareholder, Consolidated Press Holdings, may be interested in selling its holding of series 1 notes into the buy-back. James Packer’s late father Kerry was known as a shrewd, perhaps even legendary, investor. He is best known for his sale of Channel Nine to Alan Bond and his subsequent repurchase of the television network from the same man at a vastly-reduced price some years later. Whether James Packer is a chip off the old block remains to be seen but if the insiders are selling then perhaps other holders would be wise to consider the same course of action.