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New Canberra Casino owners could outsource management

Wed, Mar 20, 12:32pm by Staff Writer

The new owners of the Canberra Casino will be looking to outsource the management of the venue if the proposed sale is approved.

The Brisbane Times is reporting that shareholders are set to vote on the sale to Blue Whale Entertainment on March 21, an acquisition foreshadowed in December.

New directors Michael Gu and Kevin Fan will “bring to the company refreshed perspective at the board level and the opportunity for refinements to the strategy of the company,” according to documents related to the sale.

The documents also reveal that Blue Whale will consider outsourcing management of the casino to an external manage, affiliated with Blue Whale and the IProsperity group, of which Mr Gu is chief executive.

“If this was to occur it is expected that the employment of the senior management of the company would transfer to the management company,” shareholders were told.

The arrangement would still need to be approved by the independent directors of the company, one of whom will be Tony Fund, the casino’s current owner.

“Mr Tony Fung has advised Blue Whale that in his capacity as a significant independent shareholder, he would be supportive of such an arrangement provided it is on arms length terms which are commercially reasonable to Aquis,” the documents said.

A spokesman for Canberra Casino said the decision to outsource management was a matter for Blue Whale, if the sale was approved, and Blue Whale failed to respond to requests for comment.

The spokesman for Canberra Casino did say that outsourcing was simply “a structuring change” and would have no impact on people or roles.

“It will essentially see key management personnel employed a new management entity so they can work across Casino Canberra and other businesses if necessary,” he said.

The sale is expected to be finalised by mid-May pending regulatory approvals.

Casino sale completed in December; board approval awaits

In December, Blue Whale revealed plans to buy the casino in a complicated transaction where the company will immediately hold an 86.64 per cent shareholding in Aquis Entertainment, in exchange for a total payment of $28 million.

Blue Whale will also have a conditional right to increase its shareholding up to 94.10 per cent for an additional payment of $4 million to the Aquis group.

A report commissioned independently by Aquis concluded the proposed transaction was fair and reasonable, with the proposed share price for the converted loan being 20 cents, which was significantly higher than Aquis’ share price at any point during 2018.

The sales process drew attention to Canberra Casino’s substantial losses for the 2016 and 2017 calendar years.

“Even though visitors numbers and net casino gaming revenue increased during that period that growth was achieved through a marketing and operating strategy that focused on attracting premium and high stakes players with concomitant costs both in terms of marketing and promotion costs and payroll-related expenses,” the report said.

“Casino Canberra modified its operating strategy in 2018 to refocus on its broader customer base with less emphasis on high stakes players and a significant reduced cost base. This has resulted in a return to profitability in the second half of 2018.”

Casino Canberra has one of the smallest gambling turnovers in the country even when compared to the five regional casinos.

It is the only Australian casino not allowed to operate poker machines. It is also one of two casinos that do not have their own hotels.

It has a largely local patronage, unlike Darwin or Cairns casinos, and because of the aforementioned factors, is in direct competition with other gaming and food venues to a greater degree than other Australian casinos.

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