The New Zealand government and SkyCity Entertainment Group are giving themselves another fortnight to cut a deal on the terms for the casino and hotel operator to build a $402 million convention centre in Auckland in exchange for regulatory concessions.
Both parties agreed to extend the deadline to reach a final agreement until the end of the month, after initially setting a June 14 deadline in last month's heads of agreement, Economic Development Minister Steven Joyce said in a statement. Once reached, the deal would then be ratified by legislation, and would go through parliamentary and select committee processes.
"The heads of agreement remains unchanged in all other respects," Joyce said. "As I said at the time, concluding a final agreement in a month was always going to be ambitious."
The government wants the casino operator to take on the construction, fit-out and land costs of a new international convention centre in the country's biggest city, and is willing to offer a 27-year extension to SkyCity's Auckland casino licence and an extra 230 slot machines and 40 gaming tables in exchange.
SkyCity would gain concessions with a net present value of $316 million, according to a base case scenario assessed by Korda Mentha. The value range was put at $261 million to $329 million.
Nigel Morrison, SkyCity chief executive, said good progress has been made, but "this is a relatively complex transaction and we need more time to finalise the agreement."
Construction is scheduled to start in 2014 with the centre completed in 2017.
The deal and its negotiations raised ire from problem gaming groups and opposition MPs, who called in the Auditor-General to look at the process.
While the final decision of the government to negotiate with SkyCity passed muster with the Auditor-General's investigation, the process was deemed to be sloppy, with the casino operator treated differently from rival bidders.
Shares in SkyCity fell 1.4 per cent to $4.23 yesterday, and have gained 12 per cent this year. The stock is rated an average 'buy' based on eight analyst recommendations compiled by Reuters, with a median target price of $4.60.
Green Party co-leader Metiria Turei says it is no surprise the deadline for completing the SkyCity conventional centre deal has been extended until June 30.
"It is vital that the Solicitor-General scrutinises this flawed deal as it is potentially an illegal contract.
"The deal between SkyCity and the Government involves selling a dispensation from the Gambling Act to SkyCity.''
Constitutional lawyer Stephen Franks has prepared a legal opinion for the Green Party stating that ability of a company such as SkyCity to 'purchase' a dispensation from regulation sits uncomfortably with New Zealand law, she said.
"The attempt to bind future Governments in the current Heads of Agreement between the Government and SkyCity is also unconstitutional.
"Steven Joyce and John Key have downplayed the extent of the increase in gambling harm that will flow on from the SkyCity deal,'' Mrs Turei said.