SkyCity to sell up to $125 mln of bonds to repay bank debt

SkyCity to sell up to $125 mln of bonds to repay bank debt

By Paul McBeth

Aug. 24 (BusinessDesk) - SkyCity Entertainment Group, the country's only listed casino operator, plans to sell as much as $125 million of bonds, using the proceeds to repay bank debt.

The Auckland-based company will sell $100 million of seven-year redeemable, fixed-rate bonds, and will take oversubscriptions of up to $25 million, it said in a statement. The price will be set in a bookbuild with primary market participants, institutional investors and other financial intermediaries, with an indicative coupon of between 4.65 percent and 4.9 percent. The average weighted interest rate on SkyCity's debt was 6.06 percent as at June 30, of which bank debt was 4.4 percent and its US private placement notes were 5.31 percent.

"The proceeds of the offer will be used to reduce the drawings on SkyCity's bank facilities," the company said. "The offer forms part of SkyCity's ongoing capital management strategy."

Earlier this month, SkyCity said it had enough headroom to meet funding requirements until at least the start of 2018, but was looking at a potential retail bond issue after repaying $76 million of capital notes in May, which carried a coupon of 7.25 percent.

As at June 30, SkyCity had drawn down $384 million of its banking facility, and owed $317 million to US noteholders. Some $40 million of US notes mature in March 2017, with a further $100 million the following year.

The bond offer is expected to open on Sept. 3 and close on Sept. 22.

The joint lead managers of the offer are Westpac Banking Corp, ANZ Bank New Zealand, Deutsche Craigs and First NZ Capital.

SkyCity's shares fell 1.5 percent to $3.90, and have gained 2.1 percent this year.

Separately, a substantial shareholder notice showed US fund manager BlackRock, the world's largest asset manager, reduced its stake in SkyCity to 5.99 percent from 7 percent.

(BusinessDesk)

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