Crown puts 25% limit on Echo stake
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MELBOURNE, July 4 AAP
July 04 2012, 11:22AM
The jockeying for position by various stakeholders in casinos operator Echo Entertainment is continuing, with James Packer's Crown Ltd seeking regulatory approval to lift its stake in Echo to 25 per cent.
Casinos operator Crown has added the 25 per cent limit to its application to the NSW Independent Liquor and Gaming Authority and the Queensland government for an increase of its Echo stake to above 10 per cent.
Crown already holds a stake in Echo of 10 per cent.
Echo's constitution restricts a person's voting power to a maximum of 10 per cent unless the written consent of the regulator in NSW and the relevant Queensland minister is obtained.
Crown said on Wednesday that the regulators had accepted the new condition to its application but were yet to decide on whether Crown could exceed the 10 per cent ownership level.
"If Crown is eventually granted approval to increase its ownership in Echo to up to 25 per cent, then Crown would not be able to acquire additional Echo shares such that Crown's ownership interest would increase above 25 per cent without first making another application which would then be subject to further investigation and ultimately a determination by the regulators," Crown said in a statement.
The changes to Crown's application comes after investment firm Perpetual was granted approval by the NSW Independent Liquor and Gaming Authority and the Queensland government to increase its potential maximum voting power in Echo from 10 per cent to 15 per cent.
However, Perpetual had earlier notified the Australian Securities Exchange, on June 22, that it had ceased to be a substantial shareholder in Echo.
Malaysian gambling group Genting holds a stake of about 9.88 per cent in Echo and has also applied to regulators to lift its stake above 10 per cent.
Fat Prophets analyst Greg Fraser said the fact that Crown had asked to increase its holding up to the figure of 25 per cent was "interesting".
If Genting were to aim to acquire 25 per cent also, and both companies did in fact obtain 25 per cent each, Genting and Crown acting in unison would be enough to control Echo without making a takeover bid.
However, there was nothing to indicate yet that Crown and Genting were acting or would act in unison.
Mr Fraser said Crown may not necessarily move to a 25 per cent stake immediately. It could lift its stake to 19.9 per cent - the threshold for making a full takeover bid - and then increase its stake in Echo by three per cent every six months under the "creep" provisions of the Corporations Act.
"I guess the next step is we wait for Genting to do the same. As the gambling parlance goes: `to see your 25 and raise you something'," Mr Fraser said.
Echo operates The Star casino in Sydney, the Treasury casino in Brisbane, Jupiters Townsville and Jupiters Gold Coast.
Crown operates the Crown casino and Melbourne and the Burswood casino in Perth.
Shares in Echo were one cent lower at $4.29 at 1104 AEST on Tuesday.