17 Jun 2020

SkyCity to strengthen balance sheet through share offer

11:24 am on 17 June 2020

SkyCity plans to raise $230 million through a share issue to strengthen its balance sheet and increase liquidity in response to the uncertainty caused by Covid-19.

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Sky City. Photo: Supplied / SkyCity

The casino operator has also extended its bank facilities of $170m, taken on new debt of $160m and secured covenant waivers and relief from its existing lenders, subject to the equity raise being successful.

Board chairperson Rob Campbell said despite trading resuming, the company's outlook was uncertain.

"Over the past few months, SkyCity has faced challenges which have impacted the business and operations, particularly the disruption caused by Covid-19.

"Accordingly the [board] has resolved to increase liquidity and to provide additional financial flexibility for the business to protect against the prospect of a slower or more protracted recovery."

He said the hit to cash-flow had been "unprecedented".

The company had no revenue from its New Zealand and Adelaide properties during the lockdown period, but said its offshore online casino had traded well during April and May.

A restructure in New Zealand, which laid off about 200 staff, has saved the company about $50 million, 90 percent of staff in Adelaide have been stood down until that property reopens, and director fees and management salaries have been reduced.

Chief executive Graeme Stephens said the downsizing of the workforce was necessary and reflected the drop in international arrivals.

"But we continue to be one of the largest private sector employers, providing thousands of jobs for a diverse range of people."

Stephens said SkyCity's long-term fundamentals, such as its flagship casino in Auckland, remained strong and it had a "strong platform" to manage the challenges associated with Covid-19.

The International Convention Centre is expected to be completed mid-2023 and hotel project in mid-2022.

SkyCity expects its group normalised earnings for the 2020 financial year to be in the range of $52m to $67m and group reported earnings to be between $330 million to $360m.

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