SkyCity enters into massive equity raising measures

by William Brown Last Updated
Sky City profits down after lucky year for baccarat players

New Zealand-based casino company SkyCity Entertainment Group has launched an A$215 million (NZ$230 million) equity raising to strengthen its balance sheet after shutting down during the coronavirus pandemic.

Perth Now reports that SkyCity board chairman Rob Campbell said despite encouraging trading since reopening in New Zealand, the outlook remains uncertain as the company adjusts to the new social and economic settings.

SkyCity said it had secured waivers from its debt covenants through to mid-2021 as well as NZ$160 million in new bank funding, which was contingent on SkyCity raising NZ$200 million in net funding.

“The equity raising will ensure that SkyCity remains appropriately capitalised and provides certainty to allow for the delivery of the strategic plan for the business,” Mr Campbell said.

The equity raising consists of a fully underwritten NS$180 million institutional placement and a NZ$50 million share purchase plan.

The institutional placement will be at NZ$2.50, a 6.4 per cent discount on its last closing price of NZ$2.67 on the NZX.

SkyCity said its New Zealand properties reopened last month, except for its Queenstown wharf casino, while it expected Adelaide Casino to reopen later this month.

A NZ$330 million expansion of the Adelaide Casino is still on track to be completed by October.

SkyCity said it has received an initial NZ$105 million insurance payment for the New Zealand International Convention Centre project in Auckland, which was hit by a devastating fire in October, after a worker apparently left an unattended blowtorch on the roof.

SkyCity said the NZ government had granted it a two-year extension on the NZ$750 million project, to January 2, 2025.

SkyCity announces more job cuts amid the coronavirus pandemic

SkyCity has announced that it has let go 700 more staff members amid the coronavirus pandemic.

New Zealand is one of the countries that identified and contained COVID-19 most quickly and effectively.

Its response to the pandemic was swift and thorough, but hasn’t been enough to spare more job losses at the casino, which has venues in Auckland, Christchurch and Queenstown.

Casino Aus reported in May that New Zealand did so well at the restrictive level 3 recently that officials this week moved to Level 2.

This means New Zealanders can resume most of their regular activities.

With safety measures in place, businesses are allowed to open, schools resume classes and travel between regions can begin again.

As SkyCity casinos planned its reopenings with limited staff and much unknown in the timeline going forward, the company had to stand down a large number of its employees.

The casino operator blames the weaker economy, lower personal disposable income, reformed entertainment habits and mass gathering restrictions.

It says it is reopening as a “smaller, domestically-focused business.”

SkyCity Entertainment Group chief executive Graeme Stephens announced a further reduction in the company’s workforce with 700 more people let go.

“For a company that is centered around its people this is incredibly difficult for all involved,” he said.

“At SkyCity, we are a family, and it is incredibly tough to say goodbye to valued team members, however, we need to ensure our business is best prepared to operate in the new environment.”

The move is expected to save the company about $50 million.

Stephens emphasised the company will work with former workers and unions as the employees depart.

As for the SkyCity Adelaide Casino in Australia, this property is in limbo regarding its reopening.

The Australian government and health officials are taking more time with reopening of businesses than New Zealand, with casinos likely to be in the last phase of most reopening orders.

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