Focus: SkyCity has revealed the ‘incredibly difficult’ decision to slash 700 jobs as the Covid-19 fallout hits. Video / File
SkyCity Entertainment said it plans to raise $230m in new equity to shore up its balance sheet after taking a hit from the Covid-19 shutdown.
NZX-listed SkyCity has also organised new debt facilities worth $160m.
The casino company aims to raise $180m from an underwritten share placement - at $2.50a share - and $50m from a share purchase plan.
SkyCity said the moves were part of a comprehensive funding plan to strengthen its balance sheet and secure additional liquidity in response to uncertainty around the impacts of Covid-19.
The $2.50 per share offer price represents a 6.4 per cent discount to the last closing price of $2.67 per share on Tuesday and a 10.4 per cent discount to the five-day volume weighted average price on the NZX of $2.79 before today's announcement.
In conjunction with the equity raising, SkyCity has secured the support of existing lenders by way of covenant waivers/relief, extensions to upcoming debt maturities and additional debt facilities.
Sky City Entertainment is shoring up its balance sheet in response to challenges posed by the Covid-19 pandemic
"The funding plan effectively resets SkyCity's capital structure and provides sufficient funding capacity and headroom over the medium-term," the company said.
SkyCity also announced a $170m extension of existing bank facilities.
In determining its funding plan, SkyCity has been closely monitoring the recent and potential impacts of Covid-19 on its operations, financial position and outlook.
SkyCity closed its properties in late March 2020 and re-opened its New Zealand properties from May 14 2020.
Adelaide Casino is also expected to re-open late this month.
Sky City said on June 3 that trading since re-opening its New Zealand properties, business had been "encouraging".
"However, while the outlook for SkyCity is positive, there is still uncertainty regarding the future economic environment and re-opening of international borders," the company said today.
In addition to the funding plan, additional measures have been taken to respond to the impacts of Covid-19 and to preserve liquidity, including reducing non-essential capital expenditure and minimising operating costs.
As part of these measures, SkyCity has implemented a labour restructuring in New Zealand which is expected to generate around $50m in annualised cost savings.
Chairman Rob Campbell said SkyCity had faced challenges which have impacted the business and operations, particularly the disruption caused by Covid-19.
"Despite encouraging trading since re-opening in New Zealand, the outlook remains uncertain as we adjust to new social and economic settings," he said.
He said the equity raising would ensure that SkyCity remains appropriately capitalised and provides certainty to allow for the delivery of the strategic plan for the business.
