Moody’s might drop Crown

Moody's Investors Service said it placed the ratings of Crown Resorts Ltd. on review for downgrade.

The ratings affected are:

• The Baa2 issuer rating for Crown Resorts Ltd.;

• The provisional Baa2 senior unsecured medium-term note program rating and Baa2 senior unsecured debt rating for Crown Group Finance Ltd.; and

• The provisional Baa2 senior unsecured medium-term note program rating and provisional P-2 other short-term rating for Publishing and Broadcasting (Finance) Ltd.

Both medium-term note programs are guaranteed by Crown.

Moody's said the action was prompted by Crown's announcement that it would pursue a restructure involving the demerger of international investments to create a separately listed company.

Crown also announced a new dividend policy which would pay out 100% of normalized Net Profit After Tax.

At the same time, Crown announced its intention to explore a potential IPO of a 49% interest in a property trust, which would own Crown's hotels, excluding Crown Towers Melbourne.

"The proposed demerger of international assets, and increased dividend payout will result in a decline in Crown's retained cash flow, and materially reduce its asset base," Moody's vice president and senior credit officer Matthew Moore said in a news release.

"The reduction in retained cash flow arising from Crown's increased dividend payout and the cessation of dividends from Melco Crown Entertainment Ltd. (MCE, unrated) will mean that Crown will have less capacity to contribute to the capital cost of the A$2 billion, Crown Sydney project, from internally generated funds."

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