Sky City Stops Sale of Adelaide Casino Ahead of Buyout Bid

On October 26th, 2007, the Sky City Entertainment, the biggest casino owner in New Zealand, stopped the sale of their casino in Adelaide saying that it is a property that bidders for the organization want Sky City Entertainment not to up.

Two unidentified organization are currently studying the company’s account and may place their bids by the end of November. Both parties are eyeing Sky City gambling properties, according to Executive Director Elmar Toime. In the month of August, Sky City announced the sale of their cinema interests and Adelaide casino facility in Australia as part of their efforts to stop the drop in profits that affect the stock to a two year fall.

Sky City’s shares had a historic performance on September 21st after Sky City commented that they have received a takeover offer. Keeping the Adelaide casino may strengthen the value of Sky City. Craig Brown, who helps operate the equivalent of $174 million at Walker Capital Management Limited in Auckland, New Zealand, said that the company probably thinks that they may get a bigger value for the Adelaide casino compared with selling it separately.

Revenue before interest and taxes from the Adelaide casino interest slide down 10% last year due to competition from different hotels and clubs and delay on approval to modify the site. Sky City, which paid $180 million Australian dollars or $164 million dollars for the assets in 2000, commented that it has a good development for the location if it is not sold.

The process will probably lead to buyout proposals for the company by the end of November, according to Chairman Rod McGeoch during Sky City’s yearly meeting in Auckland. He declined to name the organizations. Buyout organization TPG Incorporated is one of the bidders of Sky City.

The Publishing and Broadcast Limited by James Packer is also interested in the company. Tabcorp Holdings Limited said that they are not interested and Tattersalls Limited has declined to comment on the issue.

The company forecast revenue will improve 12% in 2008 on spending in its gambling rooms and hotel facilities. Sky City shares slide down 2 cents or about 0.4% to $5.40 New Zealand dollars during the closing of the market in Wellington. Sky City is currently talking with three people being considered for the CEO position because ex Chief Evan Davies resigned from the company in June.

Sky City expects buyout offers for their New Zealand cinema interests within two weeks. Cinema profits in 2007 slide down 6.5% and represents a 9.5% return profits for Sky City.