By Gavin Evans
Nov. 8 (BusinessDesk) - SkyCity Entertainment has agreed to sell its Darwin casino for A$188 million to US-based Delaware North as part of a plan to free up capital and focus on its more profitable Auckland and Adelaide operations.
The sale price is about A$8 million above the book value of the asset, excluding neighbouring waterfront land at Little Mindil, which the company plans to sell separately.
SkyCity has not yet determined what it will do with the proceeds.
“There are a number of strategic initiatives being pursued that the company expects would generate returns above its cost of capital,” it said.
The company “remains committed to efficient capital allocation across its businesses going forward.”
SkyCity bought the Darwin casino and hotel business from US-based MGM Mirage in 2004 for A$195 million.
It put the asset on the market earlier this year after writing A$95 million off its value in the 2017 financial year due to changes in gaming regulations. The site delivered positive earnings growth in the latest financial year on a like-for-like basis.
SkyCity says its international business customers will retain access to the VIP/premium gaming facilities at Darwin for at least two years under the sale terms.
SkyCity and Delaware also plan to enter into a joint venture to establish an online casino business from the Northern Territory, should there be a future change in legislation in Australia permitting online gaming activities within the next decade.
“We see both international business and the online space as future growth areas for us, so we see value in this outcome,’’ SkyCity chief executive Graeme Stephens said.
SkyCity will continue to own and manage the Darwin casino on a business-as-usual approach while Delaware North obtains the required approvals from the Northern Territory Government.