Skycity Concludes Regulatory Approvals for Darwin
16 July 2004
Skycity Concludes Regulatory Approvals for Darwin Casino
New Zealand based gaming and entertainment company SKYCITY Entertainment Group (SKC) today confirmed it has received the necessary regulatory approvals and completed other conditions precedent for the acquisition of the Darwin casino and hotel complex in Australia’s Northern Territory. Settlement will take place on 22 July and the property will be re-named SKYCITY Darwin.
In statements issued to the Australian and New Zealand stock exchanges SKYCITY confirmed it has received Northern Territory Government consent and Foreign Investment Review Board approval and is now in a position to settle the transaction with MGM MIRAGE Inc. at the agreed purchase price of A$195m (NZ$215m). The transaction will be funded by additional senior debt provided by existing lenders.
SKYCITY first advised of its intention to acquire the property in February 2004, outlining at that time that the purchase was subject to various approvals. SKYCITY’s Managing Director, Evan Davies, said the company was delighted to conclude the acquisition process and looked forward to assuming ownership and operational responsibility of its second Australian property.
“This is an extremely positive time for our business. Growth and diversification are key strategic imperatives for SKYCITY - especially given that we operate within a highly regulated industry - and expansion within the Australasian gaming environment is more and more challenging to achieve as the gaming sector tends toward consolidation. “Operating in Darwin represents an excellent opportunity for SKYCITY Entertainment Group to expand its Australian ‘footprint’. The existing mix of operations at this property also fits well with the SKYCITY business model, which encompasses the provision of multi-faceted entertainment experiences,” said Mr Davies.
Located 3km from the city centre the Darwin casino and hotel is a mid-sized gaming operation, approximately 25% larger than SKYCITY’s most recently opened casino, SKYCITY Hamilton (New Zealand), in terms of gaming machines and table numbers. The property is the only licensed casino in Darwin and the largest in the Northern Territory. The property comprises three gaming rooms (26 tables, 450 gaming machines and 50 NT Keno venues), a 107-room hotel, four restaurants and five bars. SKYCITY Entertainment Group Federal House 86 Federal Street PO Box 6443 Wellesley Street Auckland New Zealand Ph +64 (0)9 363 6141 Fax +64 (0)9 363 6140 www.skycity.co.nz 2 | 2
“This is a solidly-performing, prominent facility in a region with a favourable economic outlook. The casino complex is already a major entertainment venue and has the capacity for further development.
That said, however, the recent expenditure of $18 million on property improvements and the fact that 90% of the property’s gaming machines are less than three and a half years old means that major capital outlays will not be immediately on SKYCITY’s agenda.
“We do not anticipate a need for significant post-acquisition expenditure, beyond immediate brandingrelated changes, so suffice to say it will be business as usual for the foreseeable future as we take time to become familiar with the property and local operating environment and assess what, if any, improvements to the existing business may be necessary,” said Mr Davies. SKYCITY, which acquired the former Adelaide Casino from the South Australian government in 2000 (since renamed SKYCITY Adelaide), has been dual-listed on the ASX and the NZX since July 2002 and currently has a market capitalisation of A$1.7 billion (NZ$1.9 billion).