SkyCity raises $185m to help restructure debt

Nigel Morrison

Cash raised by SkyCity will be used to reduce debt or for a tilt at a competitor rather than sit in a bank account.

The casino operator announced yesterday that it had successfully gathered more than $185 million through an institutional share placement.

The company said the $2.61 a share was at the top end of the book-build range. It had expected to raise $178.9 million.

SkyCity chief executive Nigel Morrison said the offer had been "very well embraced" by existing as well as some new shareholders.

"To get a price of $2.61 on a day after the Dow fell 3.5 per cent and have it oversubscribed by three and a half times is very pleasing endorsement of the company and its capital management initiatives."

Morrison said it was prudent for the company to restructure the "bunching" of its debt due between 2010 and 2012.

"For anybody to suggest that the money it just going to sit on deposit in a bank account earning 3 per cent for three years, that's ludicrous," he said.

"It's a position of strength. We're not beholden to any financier or any bank."

Morrison said it also gave the company funding for acquisitions should opportunities arise.

"What's happened with asset values in New Zealand and Australia - a lot of them have halved - so this time does provide great opportunities for people who do have financial resources to set things off."

Retail shareholders will be able to buy up to $12,000 of shares under a $35 million share purchase plan.

The price will be set at the lower end of the placement price ($2.61) and a 2.5 per cent discount to the five-day volume-weighted average price before the close of the offer.

SkyCity shares closed down 6c yesterday at $2.79.

If the retail offer is not fully subscribed, a further $15 million top-up offer will be made to a small number of investors to offset the effect of the placement.

First NZ Capital analyst Rob Bode said the success of the plan would be dependent on the discount to the share price.

"The stock looks pretty stable and much lower gearing - that will be pretty attractive to a lot of people," said Bode.

Forsyth Barr analyst Jeremy Simpson said it was a good opportunity for retail shareholders to buy stock at a similar discount to institutional investors.