SkyCity upon announcing 2025 financial results, confirmed plans to raise $240m (£103.9m) in funds through the issuance of new shares, priced at 70 cents (30 pence) per share. However, investors have questioned the diluted price of the new shares compared to SkyCity’s market value, and the need to raise the money rather than offloading assets.
The company is currently trading at $1 on the NZX and 91 cents on the ASX.
According to the Australian Financial Review, Allan Gray, the largest shareholder in SkyCity, has confirmed that it will proceed with the scheme, despite admitting that it felt like it had been forced to participate due to the size and price of the offer.
“We need to protect our shareholding and participate to the fullest extent possible. We consider the raising to be too large, and it has necessitated a low raising price, which is extremely dilutive to shareholders who choose not to participate,” said Simon Mawhinney, Managing Director of Allan Gray.
Mawhinney previously described SkyCity’s desire to raise capital as “ludicrous”, instead urging the operator to offload assets including its Adelaide venue, which he described as a “shareholder-funded bottomless pit”.
The venue has been entangled in a myriad of regulatory issues related to AML failings, having to pay a $67m penalty to AUSTRAC. Until last week, the venue was awaiting a decision surrounding its suitability to hold a casino licence.
Vas Piperoglou, Co-Founder of Colin St Asset Management, a 2.5% shareholder in SkyCity, also pointed to SkyCity’s $2bn of assets as a better source of funds, and expressed his dismay at having “no choice but to follow through with investing our pro-rata share in this ridiculous raising”.
SkyCity claims that, in light of current trading conditions and the ongoing investment requirements of the business, the funding injection is needed to navigate this period of economic weakness and execute on its near-term priorities.
SkyCity requested a halt in trading earlier this week to prepare for a capital raising.
The operator has confirmed that it will issue approximately 343 million shares, priced at 70 cents, to raise the aforementioned $240m.
This will be split between an institutional placement of new shares to eligible investors to raise $81m, and an entitlement offer to eligible shareholders of one new share for every 3.35 existing shares they hold, raising a further $159m.
“Our announcement today, to raise $240m of equity, will improve our financial stability in the current market conditions and provide us with the right foundations to step prudently into the opportunities that are ahead of us. We know what we need to do and we’re leaning into it,” said CEO Jason Walbridge.
SkyCity also expects to target several “asset monetisations” in the next 12-18 months, which it estimates will release $200m and aid in reducing net debt to below 2x EBITDA by the 2027 financial year.
SkyCity overcame a 5% drop in group revenue to $825.2m to return to profit in FY25, posting a reported net profit of $29.2m, up from a loss of $143.3m in the previous year. However, the company’s underlying net profit and EBITDA both fell to $71.5m and $233.7m, respectively, down 15.9% and 42% year-on-year. Reported EBITDA grew by 56.4% to $216.1m due to a one-off accounting adjustment in the previous period.
Despite experiencing a small increase in customer visitation, SkyCity attributed its drop in revenue to a lower spend per customer due to “challenging economic conditions” continuing.
On the results, Walbridge said: “Our financial results reflect the difficult operating environment we’ve navigated in FY25. The delayed economic recovery in New Zealand has led to lower discretionary spending impacting our business, and that has come through the same time as a period of elevated investment.”
SkyCity announced reported EBITDA guidance of between $170.6m and $190.6m for the upcoming financial year.
Although acknowledging the financial impacts of short-term investment, SkyCity is bullish on the company’s prospects in FY27 due to the expected opening of its New Zealand International Convention Centre venue and the onset of regulated online gaming in New Zealand.
It expects both ventures to break even within their first year of operation.
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