A move by regulators to allow Perpetual to lift its potential stake in Echo Entertainment Group has raised the possibility that other shareholders may gain approval to lift their stakes.
The NSW Independent Liquor and Gaming Authority and the Queensland government have granted approval for Perpetual Investment Management Ltd to increase its potential maximum voting power in Echo from 10 per cent to 15 per cent.
“In relation to Perpetual Investment Management Ltd, this approval overrides the shareholder restriction in Echo’s constitution that a person’s voting power must not exceed 10 per cent without the written consent of the NSW Independent Liquor and Gaming Authority and the Queensland minister,” Echo said in a statement on Tuesday.
However, on June 22 Perpetual had notified the Australian Securities Exchange that it had ceased to be a substantial shareholder in Echo.
Perpetual declined to comment on its current interest in Echo on Tuesday.
Echo operates The Star casino in Sydney, the Treasury casino in Brisbane, Jupiters Townsville and Jupiters Gold Coast.
Billionaire James Packer’s Crown holds a 10 per cent stake in Echo, and Malaysian gambling group Genting holds a stake of about 9.88 per cent.
Both Genting and Crown have applied to regulators to lift their stakes in Echo beyond 10 per cent.
Fat Prophets analyst Greg Fraser said it was unknown whether Perpetual would lift its holding in Echo, but there were implications for Crown and Genting.
“Does this (approval for Perpetual to lift its potential stake) set a precedent for other shareholders, subject to the usual probity tests?” Mr Fraser said.
He said the announcement on Tuesday raised the possibility that regulators would grant approval to Crown and Genting.
It also raised the possibility that Perpetual could build a blocking stake in Echo.
That raised questions whether 15 per cent would be a sufficient blocking stake, and could Perpetual use that as a bargaining tool to play off Crown and Genting.
“It certainly makes them (Perpetual) an important piece of the puzzle,” Mr Fraser said.
He said that if Crown and Genting were to gain approval from regulators, it would boost the Echo share price even more.
“Anything that provides the suggestion that a takeover is imminent will fire up the share price,” Mr Fraser said.
The NSW Independent Liquor and Gaming Authority said on Tuesday that applications by Crown and Genting were still under consideration, and at this stage it was not possible to provide a time frame on the determination of the applications.
Shares in Echo closed four cents higher at $4.30 on Tuesday.