Sky City pays $93.8m for Aspinall stake in Christchurch Casino

3.00pm

Casino operator Sky City Entertainment said today it had conditionally bought Aspinall's 41 per cent stake in the Christchurch Casino for $93.8 million.

The casino has been the subject of a high stakes game over its control with chairman Barry Thomas, representing 41 per cent owner Skyline, saying last week he was "implacably opposed to Sky City taking control".

Mr Thomas said last week that as far as he was concerned it was "still war" and he was on record as saying Sky City would get no help from him if it wanted to buy in.

He noted that Sky City "still hasn't had the courtesy to contact me about it".

Talks began six months ago between Sky and British casino operation Aspinall.

Skyline was also keen to buy the Aspinall stake.

The shares in Aspinall (NZ) Limited are currently held by interests associated with the late British tycoon John Aspinall and Australian billionaire Kerry Packer's Consolidated Press Holdings (Australia).

The purchase is conditional on, among other things, Overseas Investment Commission, Casino Control Authority, and Commerce Commission approvals. These approvals are expected to take approximately 6-8 weeks to conclude, Sky said.

The Commerce Commission is likely to look closely at any move by Sky City, which already has substantial casino interests in New Zealand, including in Auckland, Hamilton and Queenstown.

Christchurch Casino is also a 33 per cent shareholder in Dunedin Casinos Limited, the owner and operator of the Dunedin casino.

Sky said the acquisition would be fully debt-funded.

Invercargill businessman Louis Crimp has also put his 8.6 per cent stake, held through Southern Equities, on the block. Another 10.4 per cent of the casino is owned by SPHC (NZ) Holdings Limited, a subsidiary of InterContinental Hotels Group plc.

Aspinall (NZ) Limited also holds an effective 32.2 per cent interest in Victoria Hotels (Christchurch) Limited, the owner of the 296-room, 4-star Christchurch Crowne Plaza Hotel, which is located adjacent to the Christchurch casino in central Christchurch and was refurbished in 2002.

The Christchurch casino, which opened in November 1994, operates 500 gaming machines, 45 gaming tables, two restaurants and three bars.

Aspinall (NZ) Ltd, in its financial statements, reported a growth in its share of the surplus earnings from its investment in Christchurch Casino from $5.53 million in the year ended March 31, 2000 to $8.09 million for the year ended March 31, 2003.

Sky said the purchase price was consistent with a multiple of 7.8 times historical net earnings.

"This represents a favourable multiple on an ebitda (earnings before interest, tax depreciation and amortisation) basis to recent gaming sector transactions in Australasia. "Whilst the investment will not confer a controlling position in the underlying assets, Sky City considers that the proposed purchase provides a unique opportunity to gain a significant interest in a quality New Zealand gaming/entertainment asset at a favourable price," the company said.

Sky said the purchase was in its core business in its home. It was a well-managed operation and had shown good growth.

Sky said recently renegotiated debt facilities meant there would be no strain on the group's balance sheet.

Sky has been on a spending spree in recent times. In February it paid A$195 million ($221million) to buy Darwin's only casino from Las Vegas-based MGM Mirage.

In 2000 it paid $238 million (including working capital) for Adelaide Casino. It also paid $50 million for a 33 per cent holding in internet betting company Canbet.

Sky City shares fell 8 cents to $4.37 shortly after the announcement. Sky shares have fallen from $4.61 at the start of the year and compare with $4.00 a year ago.

- NZPA