Skycity To Purchase Shares In Christchurch Casino
Media Release – For Immediate Use 5 April 2004
Skycity To Purchase Aspinall’s Shares In Christchurch Casino
SKYCITY Entertainment Group Limited (SKYCITY) today advised the New Zealand and Australian stock exchanges that it has reached an agreement to purchase a 40.5% shareholding in Christchurch Casinos Limited (CCL), through an acquisition of the shareholding currently held by in Aspinall (NZ) Limited. The purchase price of shares in Aspinall (NZ) Limited (Aspinall) is NZ$93.75 million (on a debt free basis).
The shares to be purchased by SKYCITY in Aspinall, giving SKYCITY ownership of Aspinall’s Christchurch casino holding and its other New Zealand holdings, are currently held by interests associated with the late John Aspinall (UK) and Consolidated Press Holdings (Australia).
The purchase is conditional on Overseas Investment Commission, Casino Control Authority and Commerce Commission approvals and the associated application and approval processes are expected to take up to eight weeks.
SKYCITY Entertainment Group Managing Director, Evan Davies, said the company’s interest in a holding in the Christchurch casino was a logical extension of its New Zealand operations and indicative of the company’s forward-looking strategy.
“Christchurch Casino is a well-performing gaming and entertainment business and as a major participant in that industry we are naturally interested in pursuing opportunities in line with our core business.”
“SKYCITY has a majority shareholding in all of the gaming and entertainment properties we operate so a minority shareholding will be a first for us. We are committed to ensuring we maintain our leadership position within the industry - be that through further development in the New Zealand market or beyond. Christchurch Casino represents an opportunity for growth in our New Zealand gaming operations that would be difficult to otherwise achieve, given regulatory constraints in relation to gaming expansion in this country,” said Mr Davies.
SKYCITY has undertaken due diligence, with respect to this proposed acquisition, based on publicly-available information and information made available by Aspinall, pursuant to confidentiality agreements between SKYCITY and Aspinall.
Aspinall reports, in its financial statements, a growth in its share of the surplus earnings from its investment in CCL from $5.53 million in the year ended 31 March 2000 to $8.09 million for the year ended 31 March 2003.
Mr Davies said SKYCITY Entertainment Group is confident that its proposed investment in the successful CCL business presented a range of positive characteristics.
“Christchurch Casino is a well-managed, quality asset that has demonstrated strong growth performance over recent years and this is anticipated to continue. The investment is core business in SKYCITY’s home market and has been achieved at favourable pricing. Our recently renegotiated senior debt facility allows this acquisition to be fully debt-funded, without placing any strain on the Group’s funding or requiring additional equity,” said Mr Davies.
Aspinall holds an effective 40.5% shareholding in Christchurch Casinos Limited, the owner and operator of the Christchurch casino. CCL is also a 33% shareholder in Dunedin Casinos Limited, the owner and operator of the Dunedin casino. The other shareholders in CCL are Skyline Enterprises Limited 40.5%, Southern Equities Limited 8.6%, and SPHC (NZ) Holdings Limited, a subsidiary of InterContinental Hotels Group plc, 10.4%.
Should the purchase receive the necessary approvals, SKYCITY would participate as a shareholder in CCL alongside its partner in SKYCITY Queenstown Casino, Skyline Enterprises Limited, which also holds an effective 40.5% shareholding in CCL. SKYCITY and Skyline have been associated as the shareholders in Queenstown Casinos Limited since the Queenstown licence application was filed with the Casino Control Authority in 1997.
Mr Davies responded to recent reports of opposition by Skyline Enterprises chairman, Barry Thomas, to SKYCITY’s interest in Christchurch casino as “not surprising”.
“All parties should have obligations in respect of shareholders’ best interests as a priority - SKYCITY certainly does. The prospect of a joint bid for Aspinall’s shareholding in CCL was discussed with Skyline Enterprises some time ago, given our Queenstown operation together. We understand Skyline elected to bid for Aspinall’s shares separately and was unsuccessful. It’s therefore not surprising to witness opposition to the prospect of that shareholding being available to someone else. However, we have enjoyed a constructive working relationship with Skyline Enterprises through our Queenstown business since 1996 and would envisage the continuation of that in the best interests of all CCL shareholders,” said Mr Davies.
The Christchurch casino opened in November 1994. The business operates: 500 gaming machines 45 gaming tables Two restaurants Three bars Demonstrated growth in profitability since commencing operations.
The purchase price of $93.75 million is consistent with a multiple of 7.8 times historical net surplus before tax, thereby representing a favourable multiple on an EBITDA (earnings before interest and tax) basis to recent gaming sector transactions in Australasia.
Aspinall (NZ) Limited also holds an effective 32.2% interest in Victoria Hotels (Christchurch) Limited, the owner of the 296 room, 4 star, Christchurch Crowne Plaza Hotel, located adjacent to the Christchurch Casino in central Christchurch. The Christchurch Crowne Plaza was refurbished in 2002.