Attention is turning back to SkyCity Entertainment’s future commitment to the Australian market and whether it remains the owner of SkyCity Adelaide.
SkyCity Adelaide consists of a casino and hotel that some estimate could be worth about $500m.
It is thought that if SkyCity is ever ready to sell the asset, now would be the time, and Delaware North is ready and waiting to take it off its hands.
With most of its regulatory challenges behind it, perhaps SkyCity will be more open now to parting with the casino after previously maintaining that it was not for sale.
SkyCity bought Adelaide Casino in 2000 for a price that reports at the time said was for between $NZ180m and $NZ190m. The company has spent about $330m on the Adelaide development, which began in 2018.
It transformed the asset into a world-class integrated entertainment destination with 12 food and beverage outlets, and integrated a new hotel building with the existing refurbished heritage building.
The development was opened to the public at the end of December 2020.
Investors in the casino operator are believed to be open to a sale of Adelaide at the right price, enabling SkyCity to fully retreat back to its more profitable New Zealand market.
It’s understood the company has also been open to the idea.
But management has been of the view that while the hotel at the resort complex had been performing strongly, there was more work needed to boost earnings on the gaming floor.
For the six months to December 31, SkyCity Adelaide generated $NZ117m in income but reported a $30m loss on the back of $33m in regulatory penalties and fees.
This month, it reached a settlement with Austrac over noncompliance with anti-money-laundering and counter-terrorism financing laws for $NZ67m ($61.4m) after provisioning for $NZ73m.
It is now awaiting court approval to finalise the matter on June 7.
It still needs to finalise its Consumer and Business Services review into SkyCity’s suitability to operate Adelaide Casino, but analysts expect the largest liability from that will be no more than $NZ75m.
SkyCity also said on May 21 it had reached an agreement with New Zealand’s Department of Internal Affairs related to money laundering law compliance breaches between 2018 to 2023 and would pay $NZ4.16m.
It also faces a licence suspension for up to 10 days.
It all means that newly appointed chief executive Jason Walbridge can turn his focus to running the business.
While Delaware North owns 12 casinos in the US, it is no stranger to Australia or to SkyCity. It purchased SkyCity’s Darwin Casino in 2018 for $188m after the casino operator was hoping to achieve a price closer to $240m. Delaware North also owns the Lizard Island Resort in Queensland and provides catering services at sporting venues and airports.
Incidentally, a major casino operator is understood to be in Australia assessing options, but it’s not clear where its focus remains, whether it is with SkyCity’s rival Star Entertainment, which is also said to be in play, or SkyCity Adelaide.
The $1.2bn SkyCity is New Zealand’s largest tourism, leisure and entertainment company and has casinos in Auckland (where it generates most of its earnings), Hamilton and Queenstown, as well as Adelaide.
Listed in Australia and NZ, it is one of the three casino operators in Australasia.
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