Sky City shares fall as purchase explored

SkyCity shares shed 8c yesterday on news that the company is considering a fresh acquisition.

In its 142-page prospectus for a new Australian-based debt security, the company said it was "undertaking due diligence in relation to a possible acquisition".

It was not prepared to elaborate further yesterday.

Spokesman Paul Gregory said the disclosure requirements for a prospectus meant any processes the company was involved in had to be revealed. But SkyCity did not buy something every time it did due diligence.

Analysts said the market was generally sceptical about expansion by SkyCity following the less than stellar performance of its Australian purchases.

It owns casinos in Adelaide and Darwin.

SkyCity launched the Australian- based debt security - called ACES (adjustable coupon exchange securities) - as part of plans to move debt across the Tasman. It will raise A$150 million ($164 million).

That money would be used to pay off debt in New Zealand.

Gregory said the idea was to shift debt to Australia, where interest rates were lower, not to raise extra capital.

The company was confident that there would be strong demand for the securities, he said.

ACES are issued by SkyCity Investments Australia - a wholly owned subsidiary established for the purpose of securing funding for Australian operations.

The ACES offer is for up to 1.5 million securities at A$100 each. They will initially offer tax-paid returns of at least 5.6 per cent a year (equivalent to a gross return of 8.0 per cent).

Meanwhile, a pilot's threat to crash a small plane into the Sky Tower will have no adverse impact on SkyCity's financial performance.

The election-night events - involving a stolen plane which later crashed into the sea off Kohimarama - forced SkyCity to close the tower for nearly 12 hours.

Gregory said the incident had prompted a look at security issues and evacuation procedures, although the company already had comprehensive systems in place.