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Arnold M. Knightly

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Aussie billionaire moves closer to Cannery purchase

8 Jan 2009

By Arnold M. Knightly

LAS VEGAS, Nevada -- Australian billionaire and casino investor James Packer is one step closer to getting his long-desired foothold in the U.S. gaming market.

The Gaming Control Board on Wednesday recommended approving Australia-based Crown Ltd.'s bid to buy Cannery Casino Resorts for $1.8 billion in an all-cash transaction.

The company is scheduled to appear Jan. 22 before the Nevada Gaming Commission for final approval.

The deal, however, will not close until Pennsylvania gaming regulators finish their investigation, which Crown Chief Executive Officer and Director Rowen Craigie said should happen in the next few months.

"We look forward to the opportunity to be part of the casino industry in Las Vegas and Nevada," the 41-year-old Packer, Crown's chairman and largest shareholder, told regulators.

Craigie said the company pursued the purchase because it expects long-term growth in the locals gaming market.

The company will focus on improving the Cannery through its experience with customer loyalty programs, customer service initiatives, slot and poker products, and employee training and development, Craigie said.

Crown owns and operates properties in Melbourne and Perth, Australia; the United Kingdom; British Columbia; Alberta; and Macau.

Cannery Casino Resorts will be held as a subsidiary of Crown Ltd., which is publicly traded on the Australian Securities Exchange. Craigie said a new Las Vegas-based senior management team and board will be formed to oversee the Cannery's operations.

The board will report directly to Craigie, who will probably have a board seat, he told regulators.

William Wortman and Bill Paulos, industry veterans who formed Cannery Casino Resorts in 1996, will remain as advisers for six months after the opening of a Pennsylvania racino, which is scheduled to be completed in April. Both will also remain as directors of the company.

"Obviously, the two Bills bring a wealth of experience in running the existing Cannery operations," Craigie said. He said many of the properties' managers and employees will remain with the company after the transaction.

The Cannery Casino Resorts owns the Cannery in North Las Vegas, the Eastside Cannery, which opened in late August, and operates the Rampart Casino at the JW Marriott at Summerlin.

Crown also has a 19 percent "passive" interest in Fontainebleau, with no operational input or board seats, Craigie told regulators. It also owns 2.5 percent of Harrah's Entertainment and 4.9 percent of Station Casinos, but wrote down the majority of its $414 million combined investment last year.

Packer, who controls 38 percent of Crown, is intensely private. He reportedly checks in hotels under assumed names, and arrived minutes before the start of the 9 a.m. meeting. He departed quickly after the hourlong hearing.

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