Crown Resorts Warns of Potential Debt Covenant Breach and Job Losses Pending Victorian Inquiry Outcome

The prominent casino operator, Crown Resorts, has issued a cautionary statement indicating a potential debt covenant breach if the Victorian Royal Commission’s investigation into its Melbourne casino license yields unfavorable conclusions.

Despite transmitting a letter to Victorian Gambling Minister Melissa Horne the previous week, Crown’s executive chairman, Helen Coonan, has refuted allegations of attempting to influence the inquiry.

A publicly available redacted copy of the correspondence reveals the company informed the Minister that approximately 12,000 positions at its Southbank establishment could be jeopardized if an adverse determination is reached against Crown.

Leon Zwier, a partner at the legal firm Arnold Bloch Leibler, representing Crown, conveyed in the letter that the repercussions “would be severe” for Crown and its stakeholders should a default transpire.

“Such an event would negatively impact Crown’s investors, workforce, labor organizations, commercial creditors, customers, the hotel complex, and the broader Victorian tourism sector.”

Furthermore, the letter posited that the circumstances could “present an occasion for a prospective foreign acquirer to capitalize on the situation.”

Concerning Crown’s employees, the letter emphasizes that the majority “were not involved in, and bore no direct or indirect responsibility for, the shortcomings of the ‘former Crown'” and asserted that they would “confront further instability” in the event of a default, having already endured considerable uncertainty throughout the COVID-19 pandemic.

A NSW royal commission recently deemed the Crown Resorts organization ineligible to manage its new casino located in Sydney’s Barangaroo district. This determination came after an investigation concluded the corporation was unsuitable.