Sky City ups the ante

One minute it's selling assets the next minute it's buying them. Sky City Entertainment has certainly upped the ante after a long spell of hiding in the shadows.

Last week the company announced that it was keeping its cinemas after an extended sale process failed to bear fruit. This didn't come as much of a surprise given market conditions and the small number of natural buyers for this business.

A few days later the casino operator said it had the go-ahead to acquire the Little Mindil beachfront site adjacent to its existing casino and entertainment complex in Darwin.

The company plans to spend $50 million over the next three years developing the 5,400 square metre site.

Plans include new service facilities to accommodate outdoor events, and the creation of a boardwalk and beachside promenade.

Then this morning the company announced it is to raise its stake in the Christchurch Casino, after selling its stake in the Crowne Plaza hotel.

The company has entered into an agreement to sell the hotel to Australian private equity investor Eureka Funds Management for $61.5 million. On first reading the price appears a good one for Sky City.

Both Sky City and the Christchurch Casino's other main shareholder, Skyline Enterprises, will lift their stakes in the casino after buying shares from InterContinental Hotels Groups Ltd (IHG). Sky City will lift its stake to 46 per cent from 41 per cent.

Chief executive Nigel Morrison said it was a win win situation for the company. ³We can now focus on the Casino," he said.

Mr Morrision said the company had been working on the Christchurch deal for a while but it was just coincidence an agreement was struck in the same week that approval for the Little Mindil development came through.

The company was now looking forward to reinvestment of its gaming facilities after simplifying its corporate structure last year, he said.

Analysts say Sky City is well placed for a solid turnaround with a refurbished key asset and new in-house gaming expertise. Forsyth Barr has dropped its valuation slightly from $4.81 to $4.65 but still has a buy recommendation on the stock.