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In 2015 and as recommended by the Switzer Financial Planning team I purchased stock in CWNHA. Volatility has been quite low until the recent announcements by James Packer when the price for CWNHA dropped significantly, but the price for CWN jumped up proportionately. Are you able to explain the reason for CWNHA drop in price and what do you think it will do going forward?
A: Thanks for the question.
The drop in price in CWNHA and CWNHB has been caused by market speculation that Mr Packer will seek to privatize Crown Limited, and once privatized, there will be less reason to call CWNHA and CWNHB subordinated notes. If the notes aren’t called, them they aren’t due for repayment until 20 September, 2072.
Mr Packer and Crown Resorts have made no public comments in response to this speculation.
I can’t shed any insight into whether Mr Packer will or won’t privatize Crown, and having done so, what will be his position in relation to the notes.
That said, now the notes are yielding in excess of 11%, I am not inclined to sell at these levels – I think the reaction is overdone. However, until Crown makes some statement, the market will continue to trade in the dark.
