KEY POINTS:
The confirmation yesterday that SkyCity is well and truly up for sale had a depressing familiarity to it.
In the face of some serious structural problems - not the least of which is the lack of a chief executive - the directors have effectively opted to raise the white flag.
Some tentative interest from the as-yet-unnamed party - almost certainly a private equity player - has become the catalyst for a full-blown sale process which will draw out plenty of other tyre kickers.
It is also likely to put the hunt for a new chief executive and vital restructuring on hold for several months while the sale process plays out.
Investors, who had wanted to see some serious progress after the departure of former chief executive Evan Davies, will now have to pin their hopes on the sale process delivering a big result.
But the situation is unnervingly reminiscent of the Restaurant Brands debacle. Unable to get their business model working at acceptable profit levels, the fast food company put itself up for sale last year. The shares spiked initially but drifted back over time as the market waited and waited for some sort of news.
In the end, the one serious buyer left in the process wasn't prepared to offer a price palatable to the board. That left the company several months further along a path of poor performance and still facing an enormous restructuring job.
It did little for the credibility of the company or the board.
The same risk is inherent in the strategy the SkyCity board has adopted.
Even as it announced yesterday that it was letting the mystery buyer do due diligence, and that it was seeking other offers from interested parties, the board was warning "that there is no assurance that the approach received will result in any specific transaction".
But they have some confidence in the seriousness of at least one bidder.
The board "considers the interested party to be credible and its approach to SkyCity to be genuine", the notice said.
Well, you'd hope so. If it was anything less than credible they should be sent packing and told to come back when they were ready to make a public offer.
But why shouldn't the board take that approach anyway - even if the approach is credible? Why put its own plans on hold? Why delay the appointment of a new chief and put back progress on restructuring in the hope that a buyer is genuine?
In short, why not back yourselves and put the onus on the potential buyer to make the play rather than bending over backwards to get a sale process under way?
A sale process may have looked like the shortest route to a solution that will satisfy investors. But that process has also raised the stakes for the board. One assumes the directors at SkyCity aren't adverse to a bit of gambling. Let's hope for the sake of investors they've got their chips on the right number.
Australian gaming sector analysts remain sceptical about the odds of any serious trade players making a bid.
And those who've dealt with private equity players in the past few years are quick to warn just how fickle they can be.
There have even been some murky rumours floating around for the past week that Evan Davies may be involved in some way, shape or form with a potential bid.
It sounds almost too deliciously Shakespearean to be true - the spurned king riding back into town backed by an army of private equiteers.
Stranger things have happened, but surely the board would be extremely wary of any consortium involving Davies.
Meanwhile, it was nice to see the NZX was similarly outraged by the lousy nature of last week's disclosure by SkyCity - and the lack of disclosure by Guinness Peat Group. As the exchange implied in its note this week (it didn't name either party), technically, no one broke any rules. But the spirit of fair disclosure was ignored.
The solution may be for the NZX to take a more aggressive approach to imposing trading halts, rather than waiting for companies to do it themselves. That's the way the ASX plays it.
* Liam Dann is editor of the Business Herald
