SkyCity is spending several million dollars developing and refurbishing bars, beginning next month.
Auckland City Council was supportive of plans to develop the Federal St precinct adjacent to the casino, Morrison said.
SkyCity Entertainment revealed last month it was rebranding its Auckland casino complex as a full entertainment destination as it tried to bring in customers. It will develop a higher profile with charities with a substantial advertising campaign mid-year.
SKYCITY Entertainment Group Limited (SKYCITY) is today announcing it is undertaking an underwritten equity placement as one of a number of initiatives to enhance its capital structure. SKYCITY is also providing a trading update for the 9 months year to date March 2009 and guidance for profit outlook for the 30 June 2009 financial year.
Capital Structure Initiatives
The company is announcing an underwritten placement of 71 million new ordinary shares (the Placement), a Share Purchase Plan (SPP), and a Top-Up Offer to a small number of eligible shareholders (Top-Up Offer). Neither the SPP nor the Top-Up Offer will be underwritten.
- The Placement is for 71 million shares and is fully underwritten at a price of $2.52 per share, resulting in gross proceeds of at least $178.9 million. The final Placement price will be determined by way of a bookbuild. SKYCITY has been granted a Trading Halt to undertake the Placement which is expected to be lifted immediately following the Placement.
- SKYCITY will also offer shareholders in New Zealand and Australia further new ordinary shares through a Share Purchase Plan (SPP) of up to $35 million. The price of the shares issued under the SPP will be the lower of the Placement price and a 2.5% discount to the five day volume-weighted average price immediately prior to the close of the SPP offer. Each holder will be entitled to apply for up to NZ$12,500/A$9,000 of shares. Applications received under the SPP in excess of $35 million will be scaled. The record date for the SPP will be 30 April 2009.
- A Top-Up Offer will also be made to a small number of eligible shareholders in New Zealand whose holding would otherwise be diluted by the Placement. The Top-Up Offer will be a maximum of $15 million and will only be available to the extent the SPP is not fully subscribed to the amount of $35 million. The record date for the Top-Up Offer will also be 30 April 2009.
Further details relating to the SPP and the Top-Up Offer are expected to be made available to shareholders shortly, subject to regulatory approvals. Further details of the capital structure initiatives are also available in the investor presentation.
Nigel Morrison, SKYCITY Managing Director and Chief Executive Officer, said “SKYCITY has a sound balance sheet with a well diversified debt structure. We have determined, however, that it is prudent to proactively strengthen the company’s capital structure and enhance its financial flexibility through an underwritten placement. This equity raising will materially reduce gearing and net debt, and significantly improve credit metrics.”
The new shares issued by way of the Placement, SPP and Top-Up Offer will rank equally with SKYCITY’s ordinary shares currently on issue.
SKYCITY’s group revenues and EBITDA have continued to be resilient despite business and economic conditions remaining challenging.
Following completion of the third quarter of the 2009 financial year, SKYCITY advises its March quarter (third quarter of financial year 2009) and year to date March 2009 (9 months) revenues and operating earnings figures as below.
- Group revenues for the 3 month period ended 31 March 2009 at $203.0 million are 4.3% ahead of third quarter last year. Year to date March 2009 revenues at $625.1 million are 1.4% ahead of corresponding prior period.
- Normalised EBITDA at $69.4 million for the third quarter is in line with the corresponding quarter last year ($69.6 million) and marginally lower (-1.1%) for the 9 months year to date, at $219.1 million compared to $221.6 million for the prior period. Normalised EBITDA represents reported EBITDA adjusted for non-recurring items (NRI) and variances to International Commission Business (IB) theoretical win rate.
- Year to date reported EBITDA (before the IB and NRI adjustments) is $215.9 million compared to $233.3 million.
FY09 Earnings Guidance
SKYCITY notes that the current range of broker analyst forecasts (excluding one lower end outlier) for the 2009 financial year NPAT is $99m-$106m. On the basis of current market conditions, SKYCITY is on track to achieve an NPAT result for the 2009 financial year comfortably within that range. (This guidance assumes international commission business at theoretical win rate for the balance of FY09).
SKYCITY notes that it does not generally provide earnings guidance, but given the announcement of this equity raising, it considers that it is appropriate to update the market at this time.
Attached to this announcement are the company’s presentation to investors in respect of the capital raising and NZX Appendix 7.
Other Matters Relating to the Offers
SKYCITY has obtained a ruling from NZX to enable it to issue shares under the Placement to associated persons of directors, as permitted by the NZX Listing Rules and has also obtained a waiver from NZX to enable it to issue shares under the SPP in excess of the NZ$5,000 limit set out in the NZX Listing Rules. SKYCITY formed the view that the granting of the ruling and the waiver would be in the best interests of SKYCITY and its shareholders. Due to current market conditions SKYCITY believes that it was appropriate to seek the ruling and waiver and that the issues proceed without shareholder approval. Given the granting of the ruling and the waiver SKYCITY is not required to seek shareholder approval in relation to the capital raising.
This announcement does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States or any other jurisdiction. The New Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act), and may not be offered or sold in the United States or to, or for the account or benefit of, “U.S. persons” (as defined Regulation S under the Securities Act) absent registration or in a transaction exempt from, or not subject to, registration.
Certain statements contained in this announcement may constitute “forward looking statements” or statements about “future matters” and/or “forward looking statements” including within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward looking statements speak only as of the date of this announcement. The forward looking statements involve known and unknown risks, uncertainties and other factors that may cause SKYCITY’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward looking statements. Neither SKYCITY, nor any other person, gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this presentation will actually occur. Prospective investors are cautioned not to place undue reliance on this information and SKYCITY assumes no obligation to update such information.
Morrison said expectations were that around 30 to 50 per cent of shareholders would take that up.
That would allow for up to $15 million to be offered to high net worth investors for whom $12,000 was not enough to maintain their shareholding through a top-up.
But despite its $916 million of debt, SkyCity plans to put the money it raises in a bank deposit account, at least for now.
Chief executive Nigel Morrison said that was because SkyCity "owes no bankers anything."
"For anybody to suggest that the money it just going to sit on deposit in a bank account earning 3 per cent for three years, that's ludicrous," he said.
"It's a position of strength. We're not beholden to any financier or any bank."
Morrison said it also gave the company funding for acquisitions should opportunities arise. see attachment below for more or go here
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