Sky City on short list for casino buy

By GEOFF SENESCALL

Auckland casino operator Sky City is understood to have been short-listed to buy the Adelaide Casino, estimated to be worth up to $A150 million.

Final bids are due in this month with a sale expected shortly after.

Sky is thought to be one of three bidders vying to buy the casino from the South Australian government.

If it is successful it will be its first foray overseas.

Sky's managing director Evan Davies said he was aware of the speculation about the Adelaide casino.

He declined, however, to comment further other than to say that "we have always expressed the view that we are interested in other gaming opportunities. If we were looking beyond New Zealand Australia was the obvious place to look. As appropriate opportunities become available we will consider them."

Sky's decision to look offshore for expansion follows the former National Government's decision to put a moratorium on issuing new casino licences. Labour has also promised to review the gambling sector.

Analysts say that the decision not to issue any more licences is a negative and a positive for Sky. On the one hand it constrains the casino's ability to expand but on the other it cements the company's dominance in this country.

Apart from owning the Auckland casino, New Zealand's largest, Sky is involved in new casinos in Queenstown and Hamilton.

If Sky is successful in buying Adelaide it is likely to fund the purchase through debt rather than call on shareholders. With an enterprise value of $950 million, inclusive of around $300 million of debt, the company has plenty of scope to borrow money, analysts say.

Sky reported an after-tax profit of $45.6 million last year on revenue of $263 million. It is about to announce its interim results.