- Apr 18, 2011
EGP began trading on the ASX today now that it has demerged from Tabcorp Holdings (TAH).
SP Opened @ $4.35
SP Opened @ $4.35
THE managing director of Sydney's The Star casino has been replaced for issues relating to his behaviour, the casino's owner says.
The CEO of Echo Entertainment said today that Sid Vaikunta had left the company.
"Mr Vaikunta's employment has ended after his behaviour in a social work setting," Echo CEO Larry Mullin said in a statement.
Frederic Luvisutto has been appointed in Mr Vaikunta's place. Mr Luvisutto has been managing director of Jupiters Gold Coast since May 2011.
A spokeswoman for Echo Entertainment said she was unable to provide further details.
The Casino, Liquor and Gaming Control Authority is investigating Mr Vaikunta's behaviour, a spokesman for NSW Gaming Minister George Souris told AAP.
The authority later said it had demanded from The Star a full explanation of the circumstances surrounding Mr Vaikunta's departure.
"The authority will be responsible for assessing the suitability of the new managing director to be licensed as a special employee under the Casino Control Act," it said in a statement.
SACKED casino boss Sid Vaikunta was sent on leave six weeks before he was fired, raising questions over whether senior management knew of his alleged misbehaviour on the eve of the casino's licence being renewed.
Casino employees told The Sun-Herald Mr Vaikunta had not been seen at work since before Christmas. At the same time, government sources said it was understood Mr Vaikunta had been sent on extended leave six weeks before The Star's chief executive, Larry Mullin, announced his termination on Thursday.
The casino has refused to add to its statement that Mr Vaikunta's employment had been terminated ''after his behaviour in a social work setting''. However, it only has until 1pm tomorrow to provide a full explanation to the state government.
A COMPANY contracted by the Star casino to attract high rollers from Asia has been linked to a Chinese crime gang.
The Neptune Group, a Hong Kong company, signed a three-year deal in February 2009 with the casino's then operator, Tabcorp, to introduce high rollers via gambling tours known as ''junkets''.
Neptune Group is one of the world's largest investors in junkets, whereby groups of high rollers are offered tax concessions and other incentives to visit casinos and gamble in VIP rooms. It has a particularly large presence in Macau, which is undergoing a casino boom due to a ban on the establishments in mainland China.
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Gamblers participating in junkets are required to guarantee they will wager a minimum of $25,000 during their trip to the Star.
In announcing the contract with Neptune Group, Tabcorp said the deal was ''a great opportunity to work closely with one of the world's most professional junket operators''.
But an investigation by the international news agency Reuters in 2010 uncovered evidence linking Neptune with Cheung Chi-tai, who was named in court proceedings as a leader of the Wo Hop To triad gang.
Cheung was named as a ''triad boss'' by a gang member co-operating with police during the 2009 trial of five triads accused of plotting to murder a dealer at the Sands Macau casino. He was not charged in relation to the trial.
He will need to convince NSW and Queensland gambling authorities that Crown should be allowed to own more than 10 per cent of Echo but there is little doubt Packer wants full control of the Tabcorp spin-off before its massive investment in revamping casinos starts flowing through to the bottomline.
Crown and Echo have punted billions on the belief they can entice Asia's high rollers, and other wealthy tourists from the region, to their casinos.
The half-year results from both companies indicated they are already proving successful despite the fact their revamps are not yet complete (and notwithstanding the high Australian dollar).
Both companies have said that having more top-class casino resorts here will expand the market, not cannibalise it.
"If Australia's got three quality offerings for that China market, that might prove to be more attractive than if there's only two," says Crown chief Rowan Craigie.
His counterpart at Echo Larry Mullin agrees but believes that his properties in Sydney and Queensland should do better as these destinations are more favoured on the tourist map than Crown's properties in Melbourne and Perth.
He's not the only one.
A report from Citi said: "Echo has more leverage in our view as Sydney outranks Melbourne as a preferred destination, and Brisbane and the Gold Coast outrank Perth."
It looks like Packer agrees with that assessment too.
I guess Packer's intentions have been revealed a bit. But what I don't get is why the SP shot up after news of him increasing his stake to 10%? It seems clear that he only wants control of Echo to get The Star's licence so he can build a second casino in Sydney, which will then compete against The Star, so it's clearly not in the interests of Echo.
Update Echo Entertainment chairman John Story has resigned from the board of the casino operator, blaming James Packer's efforts to remove him.
"The board of Echo has formed the view that the ongoing disruptive campaign ... for the removal of Mr Story was damaging to the company, and that it was in the best interests of shareholders that Mr Story not contest the resolution," Echo said in a statement today.
Mr Story wanted the issue to be put to shareholders but accepted the view of the board, Echo said.
John O'Neill, a non-executive director at Echo and chief executive of the Australian Rugby Union, has been appointed acting chairman of Echo.
In a statement released this afternoon, Mr Packer welcomed the appointment of Mr O'Neill as acting chairman.
Mr Packer also dropped his efforts to seek a meeting of Echo shareholders his plan to get former Victorian premier Jeff Kennett onto the board of rival casino operator Echo Entertainment.
Separately, Echo Entertainment's board has not had any discussions with Singapore gaming operator Genting, which revealed today it had built a stake in the company, a source with knowledge of the situation said.
Analysts have speculated that Genting is preparing for an acquisition, having built up a war chest of $S3.9 billion ($3 billion), and said Echo's casinos were in cities where Genting had attempted to win licences in the past.
Malaysian gaming operator Genting has lifted its stake in casino operator Echo Entertainment with the purchase of 19.26 million shares worth $82.6 million.
The shares represent about 2.8 per cent of Echo, lifting Genting's stake to more than 7 per cent after the company started investing in Echo earlier this month.
Genting Hong Kong said in a statement to the Hong Kong stock exchange late yesterday the investment was a good opportunity to diversify its portfolio.
Echo shares were down 1.85 per cent at $4.25 in afternoon trade, despite market rumours Genting has been lifting its stake during the day.
The increase comes as Echo tries to fend off the advances of James Packer, who has a 10 per cent holding in Echo, the owner of Sydney The Star casino and three Queensland casinos.
Mr Packer and Genting's owner KT Lim met in Macau last week to discuss a potential alliance over Echo.
Echo is seeking to shore up its balance sheet with a $454 million capital raising.
A move by regulators to allow Perpetual to lift its potential stake in casinos operator Echo Entertainment Group has raised the possibility that other Echo shareholders may also gain approval to lift their stakes.
The NSW Independent Liquor and Gaming Authority and the relevant Queensland minister have granted approval for Perpetual Investment Management to increase its potential maximum voting power in Echo from 10 per cent to 15 per cent.
IT IS believed a plan to carve the ownership of Echo Entertainment three ways has been considered by James Packer's Crown and Malaysian billionaire K. T. Lim with the knowledge of the Echo board.
The plan is that each of the gaming heavyweights would own 25 per cent, with minority shareholders owning the remaining 50 per cent.
This would presumably pave the way for Mr Packer to realise his dream of using Echo's casino licence in New South Wales to build a second casino at Barangaroo on Sydney's CBD foreshore.
The scenario would fit in with both Genting and Crown seeking NSW regulatory approval to increase their holdings beyond 10 per cent. Crown's decision to seek up to 25 per cent is also in keeping with the plan.
Such a deal between Genting and Crown has been considered a distinct possibility since Genting emerged on the Echo register earlier this year and moved to 10 per cent last month.
There was little point in either of the casino companies entering into a bidding war. A war of the wallets might see Mr Packer come off second. Mr Packer has always been reluctant to launch a full takeover bid for Echo as it would stretch the financial resources of Crown.
In the meantime, a friendly relationship has developed between Mr Packer and new Echo chairman John O'Neill that has now blossomed into informal discussions of a VIP joint venture between Crown and Echo, according to reports this week.
It has also been suggested that once Crown has reached 25 per cent of Echo, there could be resolution to Mr Packer's earlier move to place his representative on the Echo board.
Mr Packer's push for a board seat was launched from a 10 per cent shareholding and strongly opposed by Echo's institutional shareholders and then chairman John Story.
In response, Mr Packer launched an anti-Story campaign that ended last month when the Echo board forced Mr Story to resign.
Both Crown and Genting should receive their approvals to buy more shares in Echo by the end of the calendar year - after which it is expected both will initially increase their holdings to the 19.9 per cent takeover threshold.
Clearly, Genting will be looking to extract something if this plan comes to pass. Industry sources have suggested this could involve Echo's Gold Coast casino, Jupiters.
Crown said yesterday its preferred option remained a deal that would utilise Echo's casino licence for its Barangaroo hotel.
The second option would be a casino licence directly from the New South Wales government, which would necessitate a compensation payment to Echo.