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Gaming Stock Drops Hits Crown Casinos
SYDNEY, AUSTRALIA --
Australia's premier casino operator, Crown Casinos, has been forced to write down almost $300 million in lost value on US casino investments. The remaining value is only about $70 million, meaning Crown lost over eighty percent of the worth of its investment.
Crown owns 4.5 percent of Stations Casinos, a company which is about to enter a prepackaged bankruptcy. Stations has been hard hit by the damage the recession has done to the Las Vegas economy, as its target clientele is Vegas locals. Unemployment and foreclosures have devastated the Las Vegas area.
Crown also owns 2.5 percent of Harrah's Entertainment, another privately owned casino operator facing liquidity problems and credit difficulties. Like many of the big gaming companies, Harrah's was caught in the middle of major purchases and expansions when the recession started.
Crown owns 19.6 percent of Fontainebleu Resorts, as well. The writedowns will appear on the results for the first half of Crown's fiscal year, due February 27th. Writedowns, as one-time items, generally do not affect dividend payments.
A Crown written statement addressed to the Australian stock market read, "The decline in valuations has been precipitated by the current economic conditions in the U.S. The decline also reflects the uncertainty regarding the future capital structure of Stations Casinos."
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