SkyCity Entertainment Group Ltd has agreed to sell its Darwin business to Delaware North Companies Inc for $A188 million ($NZ202 million), $A8 million above its book value.
The sale followed a competitive tender process. Key terms:
- Sale price of $A188 million for 100% of the shares in SkyCity Darwin Pty Ltd on a cash-free & debt-free basis, and
- Little Mindil property (book value $A11 million), adjacent to SkyCity Darwin, to be retained by SkyCity & sold separately.
SkyCity chief executive Graeme Stephens said the company had also retained the ongoing right to access the VIP/premium gaming facilities for its international business customers for at least 2 years after completion of the sale process.
SkyCity & Delaware North plan to enter into a joint venture to establish an online casino business from the Northern Territory, if Australian legislation permits online gaming activities within the next decade.
Mr Stephens added: “The sale is consistent with our ‘capital lighter’ strategy to sell non-core assets and to allocate capital to assets & businesses which we feel are aligned with our long-term strategic objectives.
“It also allows us to concentrate our Australian activities in Adelaide, which is undergoing an $A330 million expansion, due for completion in late 2020.’’
SkyCity bought the Darwin casino in 2004 from MGM Grand, and added a hotel & pool, bars, restaurants & VIP facilities. The value of the business was impaired by $A95 million in 2017 due to changes in gaming regulations, but the property grew earnings on a like-for-like basis in the latest financial year.
SkyCity will continue to own & manage the casino while Delaware North obtains the required approvals from the Northern Territory Government.
SkyCity hasn’t determined what it will do with the sale proceeds following completion, but is pursuing a number of strategic initiatives it expects would generate returns above its cost of capital.
Delaware North is one of the largest privately held hospitality companies in the world. It has operations at sports & entertainment venues, national & state parks, destination resorts, restaurants & airports.
It entered into a partnership with Auckland International Airport Ltd this year to deliver 9 new food & beverage concepts.
Attribution: Company release.