KEY POINTS:
Investors are calling for SkyCity Entertainment to keep its Adelaide casino and its cinema business off the market until after they have been properly examined by new chief executive Nigel Morrison.
Both divisions are in hiatus, with no decision on whether Adelaide is on the market and the cinemas sale stalled through lack of a buyer for the price wanted by SkyCity.
Brook Asset Management executive director Paul Glass said that after three years of poor management by the SkyCity board of directors the company should wait a while longer before disposing of assets.
And Macquarie Equities New Zealand Investment director Arthur Lim said in the current environment there were few dangers in trading on.
"People still gamble and businesses go on. Its hard to see it could be stuffed up too badly by sticking to trading for a while."
Morrison told Reuters last month that he wanted Adelaide, which is SkyCity's second biggest casino after Auckland and has been valued at A$340 million ($392 million) to A$380 million.
SkyCity had indicated in the past proceeds from any sale would go to shareholders.
"My personal view is that it should keep that casino," Morrison told Reuters. He takes up the reins as CEO in March.
Company insiders said the SkyCity board had decided it would not sell Adelaide, but yesterday SkyCity insisted Adelaide's status had not changed.
The sale of SkyCity Adelaide was suggested in July because it was underperforming.
But it was put on hold in October pending a takeover offer for the group from TPG.
The management team has been developing a recovery plan for the Adelaide business and has been active in putting that plan in place.
The TPG takeover has dissolved because the global credit crisis has made financing the deal harder and more expensive.
Consequently the company share price has slid. However it bucked the market trend yesterday and went up 6 cents to close at $4.15.
"We do not have a good environment to be selling any assets in at the moment," said Glass.
"SkyCity have some good businesses but they have just been badly run.
"It's hard to apportion blame but SkyCity has been mismanaged for the past three years at both a board and senior management level.
"For years they have been saying that they want to buy these businesses - now the strategy seems to be to sell them," Glass said
"We would rather they just halted the whole sale process for assets. Get the new CEO on board."
Arthur Lim said with the credit crunch the terms for any sale were getting harder by the day.
"SkyCity has to move back into an operational entity. A new CEO has to have a proper appraisal. The company has been in disarray for two years."
Lim said while there were problems at a corporate level, the casino businesses in Adelaide, Auckland, Hamilton and Darwin were almost monopolies.
