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PBL may be player in high-stakes game

COULD the Burswood Resort Casino’s high rollers’ room make a move across town to Kerry Packer’s Westralia Square II development?

The prospect of this has apparently been bandied about the development community for some time and it is understood the concept was dis-cussed among members of Multi-plex’s consortium bidding for the Perth Convention and Exhibition Centre.

Last week’s appearance of Mr Packer’s Publishing and Broad-casting Limited on Burswood’s share register has simply added further fuel to this speculation – particularly given newly revealed ties between major Burswood stakeholder Wyllie Group and the convention centre, which will sit below Westralia Square II.

However, much would need to change before such a move occurred. PBL has positioned itself at just under 5 per cent of Burswood’s stocks and close Packer associate and former Crown Casino owner Lloyd Williams holds a similar stake.

Shareholdings in Burswood have been capped at 10 per cent of Burswood stock.

Initially, the maximum was 5 per cent, but that level was raised in 1997.

However, both Genting and the Victoria Company have owned 50 per cent of Burswood’s shares, while Metroplex was given an option to buy 25 per cent, which it never took up.

The WA Government is currently negotiating with Burswood management about a number of issues – one of which is the 10 per cent share cap.

Putting the high rollers’ room into Westralia Square could create a casino-convention centre precinct, with work due to start soon on the PCEC over the Perth Busport car park.

It is understood the idea was seeded some time ago, when the Westralia Square development was originally considered as part of the Multiplex proposal.

“There was some discussion about,” one member of the consortium told Business News this week.

“There was some thought that the WA Government might be attracted to severing the deal with Burswood regarding the high rollers’ room if Burswood agreed to help the convention centre and then put a satellite casino in the convention centre.”

Business News was told that, if any such negotiations took place, they were handled by Multiplex directly. And if that was the case, nothing came of them (the discussions) in terms of the consortium.

“It will be interesting to watch this space,” the consortium member said.

The possibility of a CBD gambling precinct gained new currency when Wyllie Group emerged as a major shareholder in the PCEC, given Bill Wyllie’s investment group also holds a 10 per cent holding in Burswood.

But Wyllie Group managing director Ian Hoad said he had not heard any of the speculation surrounding such a development.

He said the Wyllie Group had been an equity partner in the PCEC project since 1999 and took its shareholding in Burswood last year.

Mr Hoad said the company’s casino shareholding was purely an equity investment made when Burswood’s share price was down around the 70 cent mark and that there had never been any thought of linking the convention centre with its casino holdings.

But analysts believe the latest developments could change the dynamics in the market and that Mr Packer’s holding in Burswood could be the start of a play to take control of the casino.

The casino could be ripe for the taking if the share cap is lifted. Its assets indicate a share price worth about $1.20, although the market price is around 80 cents, despite a rejuvenated management which was welcomed by the market.

It is understood that Burswood could move the high rollers’ room to another location, such as Westralia Square, providing it owned or controlled that location.

There may need to be some amendment to the WA Govern-ment’s agreement with Burswood that would require the Parliament’s involvement.

But, given the $485 million hole in the budget announced by Treasurer Eric Ripper last week, the invest-ment by Mr Packer of several hundred million dollars might prove just the carrot the Government needs.

Indeed there is nothing to stop Mr Packer turning one of the twin towers in Westralia Square II into Perth’s second casino.

The agreement that the Government would not allow another casino to be built within 200 kilometres of Burswood came to an end on Christmas Day last year. Another casino (theoretically) could be built next door to Burswood, providing it is of similar scale and quality.

But most analysts believe there is not enough business to support a second casino in Perth.

So why is Australia’s richest man so interested in a resort casino that many believe is past its halcyon days as a must-stop destination on the lucrative Asian junket market?

Two new casinos, Star City and Crown, have come onto the market in Sydney and Melbourne respectively, gradually eating into Burswood’s market.

Any improvements in Burswood’s market share would be likely to impact on Mr Packer’s Crown Casino’s share of the Asian junket market.

Indeed, since Crown Casino was built, several new casinos have opened in Las Vegas, all targeting the Asian market.

Market observers believe Mr Packer’s benefit from owning Burswood would be marketing opportunities presented by the two operations.

He has a marketing office in Asia and could use Burswood as a venue for attracting business from South-East Asia, where the flying time is short, and lure North Asian gamblers to Crown.

Having a high rollers’ room overlooking the Swan River and a brand new convention and exhibition centre would certainly look good on brochures.

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