News out today that Sky City Entertainment[SKC.NZ] has sold a share in a the Christchurch Crowne Plaza Hotel and in turn received a larger stake in the Christchurch Casino that it owns with Skyline Enterprizes and cash in hand leaves this shareholder a happy man.
It adds to the news yesterday that the casino company will develop a "luxury resort" on the Little Mindal land it owns in front of the Darwin Casino.
The larger stake in the CHCH Casino takes the Sky City holding from 41% to a 46% holding.
The hotel was sold for $61.5 million, so one might presume that the Sky City share of the booty was $30.75 million. There was no breakdown of how much the extra 5% stake in the South Island Casino cost and therefore how much cash was left to disperse to debt pay downs or even a dividend to shareholders.
Shareholders in Sky City are entitled to know what the 5% cost.
The cash left over is more likely to be going towards subsidising Sky City Cinemas, a division that was on the block for a year but failed to sell as of last Friday because the buyer "failed to get financing", according to the Sky City Press release.
Any credible buyer interested in the cinema would only have to fork out about NZ$60 million and they would have known that was around the asking price when Sky City wrote down the assets of the division last year.
It is more likely that the deal fell through because the assets wouldn't have even got near the $60 million price tag rather than blaming the credit crunch for failing to sell a loss making business.
I'm naturally annoyed at management for not disposing with the cinemas, even for less than the asking price. It is going to be a continuing drain on capital expenditure and is never going to make any sort of decent return on assets or capital.
Cinemas as a business are on a par with the airline industry when it comes to losing money and track records for both show a history of company collapses, huge expense for owners and continued disappointment.
Nigel Morrison needs a boot in the head for that one.
Sky City @ Share Investor
Sky City Entertainment 2009 Interim Profit Review
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit
Discuss this topic @ Shareinvestor.net.nz
Sky City Financial Data
Related Amazon Reading
Double or Nothing: How Two Friends Risked It All to Buy One of Las Vegas' Legendary Casinos by Tom Breitling
Buy new: $17.72 / Used from: $1.40
Usually ships in 24 hours
c Share Investor 2008