BIL takes punt on Sky sale

By Karyn Scherer

Brierley Investments has thwarted a management buyout of one of its premium assets by announcing it will sell its stake in Sky City through a public offering.

The beleaguered investment company confirmed yesterday that it intends to sell its 66 per cent shareholding in the Auckland casino complex through an international offering of instalment receipts.

The sale, which is expected to raise at least $400 million, follows a string of asset sales and dividend payments which have seen it almost halve its debt over the past eight months.

It also follows two hugely successful public offerings through instalment receipts: Ameritech's stake in Telecom; and a portion of the Australian Government's stake in Telstra.

The offer is being handled by CS First Boston and is expected to open around March 8. The price for the first instalment will be set at the time of application, with the second instalment due by April 20 next year.

Sky City's managing director, Evan Davies, was reluctant to comment on management's hopes for a buyout, saying only that it was a "difficult question to answer."

"At present, with Brierley having announced its intention, then it has developed its strategy and intends to pursue it," he said. "That's Brierley's prerogative, really and now I'm focused on running the business."

Mr Davies said he did not expect any changes in management as a result of the change in shareholding, except chairman Jon Hartley, who has already been replaced by Sir Peter Elworthy.

Confirmation of the sale comes just two months after Brierley insisted the sale of its 24 per cent stake in Australian media company John Fairfax Holdings would "completely restore" its financial strength.

It also coincided with the release yesterday of a better-than-expected result for Sky City for the six months ending in December.

Although visitor numbers remained static over the six-month period, the amount they spent on gambling was up. Lower costs also enabled the company to boost its bottom-line profit to $22.4 million - up 34 per cent on the same period the previous year.

While the tower and hotel continued to struggle, gambling revenue continued to climb, prompting the company to boost its profit forecast for the full year to $42 million-$43 million. It has previously been predicting a bottom-line profit of $40 million-$41 million.

The result helped push Sky City's share price up 11c to close at $6.96 last night - well above the $4.55 it sank to in early October. Brierley's share price remained unchanged at 45c.

Brierley's own interim result is due to be released on March 4.
Pictured: Brierley puts its Sky chips on the table.