SkyCity bid gets green light but deal stalled

Damage to the Christchurch casino means a new SkyCity offer is unlikely in the near future. Photo / Supplied

NZX-listed SkyCity Entertainment Group has been given state clearance to take full control of Queenstown and Christchurch casinos in a deal involving assets worth $246 million - but the bid appears to have been shelved.

The Overseas Investment Office has allowed the Australasian tourism and leisure giant's expansion wager.

But SkyCity's bid - which was rejected by the casinos' other major shareholder Skyline Enterprises last year - looks unlikely to be increased following months of Christchurch closure post-earthquake.

The building at 30 Victoria St is in Zone 4 of the Civil Defence cordon, has a yellow sticker and has been shut since February 22.

Last month more than 500 staff were asked to take redundancy, use annual leave or take leave without pay till further notice.

Scott Campbell, SkyCity corporate communications manager, said approval was sought for the offer to Skyline last year.

"That was subsequently rejected. There is no new offer. We're not sure why it has taken this long for OIO to release this," Campbell said.

SkyCity's play for control of both casinos needs statutory approval because assets involved are worth $100 million-plus.

Late last year, SkyCity laid its cards on the table, aware of "uncertainty" about a proposal to Skyline to buy out the remaining half of Christchurch Casino.

"SkyCity wishes to confirm that it has advised Skyline Enterprises of a cash offer that it is willing to make for its interest in Christchurch Casino," the November 10 NZX announcement said.

Skyline's board opposed the approach, which included buying out the 40 per cent of Queenstown it does not already control.

The Overseas Investment Office outlined how SkyCity pitched its deal.

"The investment simplifies the ownership structures of the Christchurch and Queenstown casinos. Being part of the SkyCity group of companies will enable the full management expertise of SkyCity Entertainment Group as a casino operator to be made available to Christchurch Casinos and Queenstown Casinos," the decisions summary said.

"The value of the assets of Christchurch Casinos and Queenstown Casinos and their 25 per cent or more subsidiaries is greater than $100 million," the office said.

Christchurch Casino says it hopes to open soon.

"We still do not know when access will be granted to the public to the area the casino is located in. With ... the on-going uncertainty with the buildings surrounding us, we are still not in a position to say when we may reopen. We are committed to staying in Christchurch's CBD and on our current site," the casino says.

SkyCity, with a market capitalisation of $2 billion, rose 4c in trading yesterday to $3.60.

WHO OWNS SKYCITY

* Overseas - 30.59pc
* NZ - 27.38pc
* Australian - 23.87pc
* Investors Mutual, Aust - 6.25pc
* United States - 6.43pc
* British - 5.48pc
- Source: Overseas Investment Office decision summary