On February 5th, 2008, casino operator SkyCity Entertainment from New Zealand is not the only casino organization that is having some problems finding a buyer that can secure enough cash. U.S. based gaming organization Harrah's Entertainment is having similar concerns with a private equity buyout for their business. It was generally believed that the same party-TPG and Apollo-was involved in both buyout deals.
The organizations were checking out SkyCity but protested when it came to getting financing last December. Yesterday, they gave up on securing Harrah's after failing to get $14 billion in financing. The attempt to give up on Harrah's came after Goldman Sachs gambling analyst JBWere's in New Zealand, Marcus Curley upgraded SkyCity's stock for hold. He commented that SkyCity's profits were set to return to its usual levels that the remodeling of its main gaming area at the Auckland Casino was nearly done.
The company has blamed the stoppage of work, which is now in progress for about eighteen months, for the downgrade in its total turnover on their casino table games and poker machines. Mr. Curley commented that he expected the earnings at their Auckland casino would improve soon and surpassed its previous earnings. When it became too obvious to stockholders just last month that there is no bid coming, the shares of the company slide down to rock bottom.
The stock sells at 8.2 times future earnings. Its rival stock costs around 10.5 times their expected revenues. The stock closed at four cents during yesterday's trading at $3.74. It should gain additional value soon if a prospective bidder returns or if gamblers would spend enough.
The new refurbishments, aside from the brand new baccarat room, aims at changing the seven year fall in the stock market share and attracting more Asian gamblers to visit the casino. The last time that the casino remodeled the casino gaming floor, gaming profit improved to about five percent.
A similar remodeling venture at Tabcorp's Conrad Jupiter's casino on the Gold Coast inspired an increase in profits and visitors of about 4%.
03/02/2008 22:44 PM
Davis Coulter