Investors yesterday reacted positively to news SkyCity
Entertainment was negotiating with the Government over a
proposal to build a $350 million convention centre in
The company's shares rose 6c in early trading to $3.52 before
closing at $3.53, up 2.02%.
The proposed 3500-seat convention centre would be built
between Hobson and Nelson Sts and is expected to provide an
estimated $90 million boost to the Auckland economy through
new spending by additional international visitors.
It is projected to attract 183,000 delegates annually, adding
an extra 101,000 visitor nights and 350,000 additional
delegate attendee days in Auckland.
SkyCity will pay the full construction costs but has asked
that the Government consider alterations to gambling
legislation and regulations.
Forsyth Barr upgraded the stock from accumulate to buy, with
broker Peter Young saying that having SkyCity as the
preferred developer of the convention centre was a positive
"The next stage is for SkyCity to negotiate the required
regulatory concessions to justify it spending $350 million of
Among the key concessions expected to be sought were an
expansion in gaming tables and machines, although no numbers
had been received, he said.
SkyCity would have also sought an extension of its gaming
licence, which expired in 2021, but that was seen as a
formality, with little risk associated with the company not
getting an extension, regardless of the convention centre
It was likely there was talk around relaxing of restrictions
on the note acceptor on machines, currently $20, and an
increase in cashless gaming - ticket in, ticket out - which
operated on about 10% of SkyCity gaming machines, Mr Young
"SkyCity is targeting a January 2015 opening for the
convention centre. We expect the negotiations, required law
changes and detailed planning to take around 12 months before
SkyCity starts digging in the ground.
"The national convention centre is positive for the company's
existing facilities - hotels, restaurants, Sky Tower and
casino - given the number of additional visitors to its
"However, convention facilities, at best, generate only a
small return as a standalone operation."
Should the project proceed, Mr Young expected the company
would be able to quickly capitalise on any gaming regulatory
With the opening of its international and Pacific room
facilities for its international high-roller and local Asian
premium-table players, the company had vacant space on the
mezzanine floor above the casino for a quick and cost-effect
expansion of its gaming facilities.
The company was also expected to modify the layout of its
main gaming floor, which could be congested at peak times, he