Crown pulls the plug on casino in Las Vegas
4th June, 2008
Crown Ltd., based in Australia, said it will scrap the project to develop a $5 billion Las Vegas casino, which would have been the tallest tower in Las Vegas with a 5,000-room hotel.
“The recent upheavals in world credit markets have made it increasingly difficult for Crown and its partners to develop a commercially viable project on what remains an attractive location on the Las Vegas strip,” said Rowen Craigie, chief executive of Crown.
Nobody seems surprised at the fact that the casino project is not moving forward when you look at the current state of affairs, but many seem disappointed nonetheless.
“It’s indicative of the fact that in part credit markets are difficult at the moment,” said Angus Gluskie, portfolio manager at White Funds Management. “It’s also indicative of the fact that in a slowing growth environment, the gaming sector does carry some short term risk, given its exposure to discretionary spending.”
Many are suggesting that the market is unstable and Crown should be mindful of something like this happening in another stake.
“The question here is they’ve burned some money on this deal,” said Akshay Chopra, Karara Capital analyst. “What about other equity stakes that they have, smaller ones – there may be a risk that something similar might happen, such as with Fontainebleau.”
Crown’s shares went down initially after the announcement but ended up only 0.4 percent at $10.38. The group was valued at $7 billion.
By Michael
