13 May 2013

SkyCity has extended casino licence under deal

1:43 pm on 13 May 2013

SkyCity will have an exclusive casino licence in Auckland until 2048 after a deal with the Government to design, build and operate a national convention centre.

Shares in the listed casino operator jumped more than 3% after the agreement was announced on Monday morning.

SkyCity will spend $315 million to build and fit out the convention centre and $87 million in land costs on the site of the development, opposite its existing casino in Auckland city.

In return, it will get a range of benefits including extra 230 gaming machines, more gaming tables, and the introduction of card-based cashless gaming.

The Government will extend SkyCity's licence, which had been due to expire in 2021, to 2048.

SkyCity chief executive Nigel Morrison says the licence extension was crucial to the deal.

"The main value for us is having certainty about the licence. We're New Zealand's seventh largest public company, this is our major and largest asset."

Mr Morrison says without that certainty it would be more challenging for the company to raise money from institutions and banks.

When the casino licence expires, the convention centre deal also expires and could evaporate, or be renegotiated.

Mr Morrison says the total investment by SkyCity of of $402 million will deliver a reasonable return for shareholders, 95% of whom are in New Zealand.