Massive Dividends For Crown Shareholders as Staff Stood Down
“We’re all in this together,” is a common saying around the world when talking about COVID-19. Closed businesses are the world have left hundreds of thousands of people without work. Crown Resorts is one such business. It stood down 11,500 staff, but just paid $205 million in dividends to shareholders.
Publicly listed companies pay their shareholders dividends, usually twice per year. These dividends are a share of the company’s profits and a reward for investing in the said company. Crown Resorts has issued a massive $205 million dividend that’s shared across its many shareholders.
James Packer is a major shareholder in Crown Resorts and is set to benefit massively from this payout. The sheer number of shares Packer holds entitles him to $73 million in dividends. Packer’s net worth current tops 4.25 billion so the extra $73 million is a drop in the ocean.
Lawrence Ho, who is currently under investigation from the New South Wales government, is receiving $20 million.
Why Would Crown Pay Dividends Now?
The timing of the dividends announcement is strange to say the least. Crown’s revenues have slowed to a mere trickle since Prime Minister Scott Morrison ordered casinos to cease all gambling activity.
Furthermore, Crown’s chief executive Ken Barton and his senior executive and directors have taken a 20% pay cut. Also, consider the fact 11,500 of Crown’s staff are temporarily without jobs and you can see why there’s an uproar. The government’s JobKeeper facility is picking up part of Crown’s tab for those stood down staff.
Crown also informed investors it is losing $20 million to $30 million per month it is closed. It does have $500 million in cash reserves, however, so has plenty of wiggle room for the coming months.
The company also told investors it has secured $1 billion in debt facilities. It has done this despite having $500 million laying around and $205 worth of dividends payments. It’s sickening when you think about it.
The $1 billion will help Crown complete its Barangaroo project in Sydney, according to industry experts.
Other Australian Companies Defer Dividends
The Star, Crown’s biggest rival in the casino sector, is deferring planned dividends. The Star laid off the majority of its workforce but isn’t rubbing salt in their wounds by paying abhorrent dividends.
Additional funding has been sought by The Star despite it enjoying $700 million of cash reserves. The Star secured $200 million in additional funding to see it through the enforced closures. Estimates suggest staying closed until the end of June comes with a $220 million price. This increases to $320 million if Scott Morrison demands casinos remain closed until the end of September.
Most Australian companies are reeling right now with revenues plummeting. Some of the most established major brands have deferred or cancelled dividends during these testing times.
Harvey Norman, Premier Investment, and Flight Centre are among those cancelling yearly dividends.
When Will Mattes Return To Normal?
Nobody knows when the current social distancing measures will end. The spread of the COVID-19 virus is unprecedented. Worldwide confirmed cases stand at almost 2.4 million. Current deaths are approaching 60,000.
Australia has fared well so far with 6,612 confirmed cases. The death toll in Australia currently stands at 71. Scientists believe this may be because of the hotter weather which the virus doesn’t thrive in.
The government also acted quickly to close down businesses and implement social distancing measure. Ironically, Crown and The Star were among the last companies forced to comply with such measures. They scaled down operations by turning off half their pokies, before being forced to completely close last month.