SkyCity taps shareholders for $263m

Finance required after sale process for Hobson St hotel fails to reach conclusion.

Casino group SkyCity [NZX: SKC] is raising $263 million from shareholders to fund its development projects in Auckland and Adelaide, after deciding not to sell its Hobson St hotel project.

The rights issue offers one new share for every 10 held by retail and institutional shareholders, with the new shares priced at $4.40.

SkyCity shares closed yesterday at $5.01.

The company placed its shares on trading halt today pending the results of a bookbuild in relation to the offer, which will allocate shares not taken up by eligible shareholders.

SkyCity said it expected the equity raising to be completed by mid-June.

The immediate use of the money will be to pay down bank debt.

In a trading update, SkyCity said it was continuing to deliver improved financial performance. Normalised revenue in the year to date up to April 30 was up 11% to $916.9 million, while normalised group earnings before interest, tax, depreciation and amortisation were up 12% to $281.3 million.

SkyCity had previously said proceeds from the sale of its Hobson St hotel, currently under construction, would allow it to retain a BBB- credit rating. In February it said $300 million of existing undrawn bank facilities provided enough money to finance the construction of the hotel and the associated NZ International Convention Centre.

The sale of the hotel was “progressing well” with “strong interest from a broad range of domestic and international investors,” it said.

NBR understands SkyCity’s former chief executive Nigel Morrison was a keen supporter of the hotel sale funding option.

Mr Morrison resigned on April 7 and left on April 29.

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