New Zealand Casino Can't Find Buyer Willing to Gamble
At a time when casino construction worldwide is at a record pace, an existing casino company has found the international credit crunch is preventing it from finding financing. SkyCity Entertainment, a New Zealand casino operator, has failed in attempts to secure backing from TPG and Apollo Management.
Falling revenue was key to the rejection, and SkyCity blames that on renovations and construction at its Auckland Casino, the company's keynote property. Goldman Sachs just yesterday upgraded SkyCity stock from a "hold" to a "buy", as analyst Marcus Curley said he expected revenues to rise above previous levels, setting new records now that the refurbishment of Auckland Casino was complete.
Without a takeover bid, stocks have spiraled to the lowest point in five years. SkyCity's stock was valued at a much lower percentage of future earnings than competitors.
However, the casino saw revenue rise by five percent the last time improvements were done, and this time a high-roller baccarat room was added to attract the baccarat players feuling casino revenue growth around the globe. Additionally, more effort has been made to target Asian players, another industry strength.
Curley said he finds SkyCity to be a bargain, and expects that, once the credit market calms, more serious suitors for the business will appear.
Apparently, like everyone else in the world, casinos are subject to the whims of the financial market, regardless of the soundness of the business. Still, it seems SkyCity might be a diamond in the rough to a cash-rich investment group daring enough to be the first to act.
