Packer forces Story out, backs O'Neill

8 Jun 2012, 5:09 pm   -   Source: AAP

Billionaire James Packer forces rival casino chairman John Story off Echo board and backs away from campaign for Jeff Kennett as Genting buys stake in Echo

Billionaire James Packer has forced a rival casino owner to dump its chairman, but backed away from his plan to get former Victorian premier Jeff Kennett on the company's board.

On Friday the Echo Entertainment board dumped chairman John Story and elected rugby administrator John O'Neill as acting chairman.

It came after a concerted destabilisation campaign by Mr Packer, the Crown Chairman, who is eager to get Mr Kennett onto the board of the rival casino operator.

Singapore gaming operator Genting Bhd also bought a 4.9 per cent stake in Echo Entertainment this week.

Crown, which recently took a 10 per cent holding in Echo, says it will not pursue a shareholder meeting, scheduled for July 20, to consider appointing Mr Kennett to the board.

However, Mr Packer is still behind Mr Kennett, saying he would add "significant value" to Echo as a director.

"We appreciate that this will be best achieved with the support of the Echo board," Crown chairman James Packer said in a statement.

Crown also says it supports Echo's decision to appoint Mr O'Neill, a non-executive board director and chief executive of the Australian Rugby Union, as acting chairman.

Mr Packer has been seeking to gain a presence in the lucrative Sydney gaming market by increasing his influence on Echo, which holds the city's sole casino licence.

Echo's board decided the campaign against the company for the removal of Mr Story was proving too damaging, so Mr Story should not contest the vote.

Mr Story wanted the issue put to a shareholder vote, but accepted the board's view and handed in his resignation.

Amid all the wrangling, Genting Bhd, which operates casinos in Singapore, Malaysia and the Philippines, took at least $150 million stake in Echo this week.

Genting was a founding shareholder in the Burswood casino in Perth, which is now owned by Packer's company Crown.

Fat Prophets senior analyst Greg Fraser said Mr Packer had got what he wanted, but questions remained about whether it would change anything at Echo and whether he would ultimately be able to build a new casino in Sydney to attract Asian high rollers.

"Depending on how Echo changes its board, they may allow Jeff Kennett onto the board now that Story's no longer there or do they continue to stonewall Packer's advances and force him into more aggressive moves," Mr Fraser said.

"Mr Packer may also agitate for legislative change in NSW in order to try to get the exclusive licence that Echo has revoked and allow a second licence in NSW."

However, the probability was low.

Earlier on Friday, a major shareholder in Echo, Perpetual Investments, indicated it would not support Mr Packer's move to install Mr Kennett.

Echo operates The Star in Sydney. It also owns the Jupiters casinos on the Gold Coast and in Townsville, and the Treasury casino in Brisbane.

An Echo spokesman said the board would elect a permanent chairman in due course, but no time frame had been set for the decision.

Echo shares closed up 19 cents, or 4.4 per cent, at $4.49 and Crown shares were down 23 cents, or 2.7 per cent, at $8.13.

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