Why SkyCity’s $240m Equity Raise Could Define Its Next Chapter

Challenging Year for SkyCity

SkyCity Entertainment Group Limited has released its financial results for the year ended 30 June 2025, revealing a mixed performance shaped by a sluggish New Zealand economy and significant strategic investments. Group revenue declined by 5% to NZ$825.2 million, while underlying EBITDA fell 16% to NZ$233.7 million, reflecting lower discretionary spending and increased costs related to regulatory upgrades and preparations for new business lines.

Despite these headwinds, reported EBITDA rose 56% to NZ$216.1 million, primarily due to the absence of one-off charges that weighed on the prior year. Reported net profit after tax swung to a positive NZ$29.2 million from a loss of NZ$143.3 million in FY24, aided by the resolution of a long-standing South Australian casino duty dispute.

Strategic Investments and Operational Highlights

SkyCity’s elevated investment program included regulatory system upgrades under its Building a Better Business (B3) initiative, pre-opening costs for the New Zealand International Convention Centre (NZICC), and ongoing development of its online gaming platform. The NZICC, a major new convention and entertainment venue in Auckland, remains on track for a February 2026 opening and is expected to generate an additional 500,000 annual visitations once fully operational.

Operationally, the company successfully launched Carded Play across all New Zealand sites in July 2025, a move aimed at enhancing host responsibility and operational efficiency. While visitation increased by 4.6%, spend per visit declined due to economic pressures and higher VIP customer churn, particularly in Adelaide where enhanced anti-money laundering measures impacted premium customer segments.

Balance Sheet Resilience Through Equity Raising

In response to the challenging trading environment and ongoing capital demands, SkyCity announced a fully underwritten NZ$240 million equity raising. The raise comprises an institutional placement of approximately NZ$81 million and a 1-for-3.35 accelerated non-renounceable entitlement offer to raise around NZ$159 million. The offer price of NZ$0.70 per share represents a 22.8% discount to the theoretical ex-rights price and a 30% discount to the last traded price.

The proceeds will be used to repay debt, fund transaction costs, and strengthen liquidity, reducing pro forma net debt to covenant EBITDA from 3.1x to 2.2x. SkyCity also targets asset monetisations worth NZ$200 million over the next 12 to 18 months, including potential sales of an Auckland carpark concession and the 99 Albert Street office building, aiming to lower leverage below 2.0x by FY27.

Outlook and Regulatory Developments

Looking ahead, SkyCity expects FY26 underlying EBITDA between NZ$190 million and NZ$210 million, factoring in ongoing investments in NZICC and online gaming readiness, as well as the EBITDA impact of Carded Play. No dividends are planned for FY26, with resumption targeted once trading conditions improve.

The company also reported a positive outcome from an independent review confirming the suitability of SkyCity Adelaide to hold its casino licence, although the South Australian Liquor and Gambling Commissioner is still considering potential enforcement actions. SkyCity remains committed to its risk transformation and regulatory compliance programs.