Amid gambling trouble, Crown Resorts to spin off hotel unit

(Crown Resorts floats IPO)

According to Australian media outlets, James Packer, CEO of Crown Resorts, will spin off a 49-percent stake in the company's hotels and retail properties, as the company comes under fire amid allegations of gambling malfeasance.

The potential IPO is likely to include the Crown Promenade hotels in Melbourne and Perth, plus the Crown Metropol hotels in Melbourne and Perth.

“If implemented, the IPO could realize significant value for Crown Resorts shareholders, while providing the ability to maintain a majority interest in key assets within the Australian business,” the company said in a statement. “Such an IPO would support Crown Resorts’ ongoing capital management strategy and allow Crown Resorts to maintain a strong balance sheet and credit profile to fund existing development projects.”

At the group's annual general meeting in Perth, and as reported by The Sydney Morning Herald, Crown Resorts' chairman Rob Rankin confirmed the creation of a listed property trust to hold its owned hotels; final sign-off by the board was still required.

All of this comes on the heels of Chinese allegations against 18 Crown employees, who were arrested on suspicion of committing "gambling crimes" in the country, as laid out in this New York Times story.

Shares of Crown Resorts plunged on the news of the arrests, losing losing more than 10 percent of their value.

As AAP points out, "The crackdown could put Packer’s ambitious new $2-billion casino at Sydney’s Barangaroo at risk, as the project relies heavily on Chinese patronage."