SkyCity Puts Adelaide Up for Sale and Hires Advisers to Weigh Offers for the Whole Group

SkyCity Entertainment Group will run a formal, UBS-led sale of SkyCity Adelaide after inquiries from what it calls "credible interested parties", and has hired advisers to engage with suitors for the entire group. The board says a sale is not certain, and that the approaches it has already had undervalue the company.

• SkyCity Entertainment Group told the NZX and ASX on 30 September that it will "shortly commence a formal sale process, led by UBS" for SkyCity Adelaide, South Australia's only casino, after inquiries from credible interested parties
• The board has also appointed UBS and Chapman Tripp to engage with interested parties on "any potential transaction involving the Group", after two non-binding takeover proposals made in May at NZ$0.70 and NZ$0.75 a share were not improved
• SkyCity says there is "no certainty" that the process will result in any transaction, and will update shareholders at its annual meeting on 21 October
• SkyCity Adelaide earned underlying EBITDA of A$19.5 million (approximately $13.6 million) in the year to June 2026, down 31.5%, and the group wrote down its carrying value by A$43 million as it settles a regulatory review for an A$21 million fine
• The group, which declared no dividend for FY25 or FY26, is raising NZ$275 million to NZ$300 million from asset sales to cut net debt of NZ$591 million, building on the NZ$74.5 million Auckland property sale

SkyCity Moves From Reviewing Adelaide to Selling It

SkyCity Entertainment Group, the New Zealand casino operator listed on the NZX and ASX, said on Wednesday that since announcing a strategic review of its Adelaide business on 20 August it has "received inquiries from credible interested parties in that asset", and will shortly start a formal sale process, led by UBS, "to seek proposals from these and other parties". It did not name the parties, set a timetable or give a price expectation.

The Adelaide sale is part of a wider move. The board said it continues to believe that "the current share price and previously disclosed approaches do not fully reflect the underlying value of the SkyCity Group", and that it will "now also evaluate a range of potential opportunities under a structured process". It has appointed UBS and the law firm Chapman Tripp "to assist in engaging with interested parties regarding any potential transaction involving the Group" and to evaluate other opportunities, adding that there "is no certainty that this process will result in any transaction or other outcome".

The approaches were disclosed on 25 August, after media reports of talks with Oaktree Capital. In May, SkyCity said, it received a non-binding indicative proposal from a special situations fund managed by Oaktree Capital Management to buy all its shares at NZ$0.70 cash each, and another from an unnamed party at an implied NZ$0.75. Both required at least eight weeks of due diligence, debt financing and regulatory approvals, and one or both parties asked SkyCity to sign no asset sales, grant exclusivity and keep its existing debt facilities. The board rejected them as undervaluing the company, with "problematic" conditions. It said on Wednesday that it has kept talking to both parties, that no improved proposals have been received, and that the discussions will continue. On SkyCity's 1,103,055,047 shares, the two prices imply equity values of roughly NZ$772 million and NZ$827 million (approximately $435 million and $466 million), by our calculation. The shares were up about 5% in afternoon trading, according to interest.co.nz.

What Is Being Sold

SkyCity Adelaide is the group's only Australian property and holds South Australia's sole casino licence, according to SkyCity's 2026 annual report. The licence, an agreement with the state's Attorney-General dating from 1999, runs until 30 June 2085 and gives exclusive rights to casino gambling in the state, other than online, until 30 June 2035. The property has 1,080 gaming machines, against a limit of 1,500, an allowance of 200 table games and a hotel, and employs about 1,300 people.

In the year to 30 June 2026 its revenue was flat at A$212.1 million (approximately $148 million), with premium table revenue down from A$5.3 million to A$1.4 million, while operating costs rose 4.9%. Underlying EBITDA fell 31.5% to A$19.5 million, a 9.2% margin, and that figure excludes the cost of the Building a Better Business (B3) remediation programme, NZ$23.5 million in the year. SkyCity wrote A$43 million off Adelaide's carrying value after a Deloitte valuation. At current exchange rates, Adelaide supplied about 13% of the group's NZ$181.6 million (approximately $102 million) underlying EBITDA, by our calculation.

The business carries its regulatory history with it. In June 2024 the Federal Court ordered SkyCity Adelaide to pay a A$67 million (approximately $47 million) civil penalty in proceedings brought by AUSTRAC, the financial intelligence agency, over anti-money laundering failures that AUSTRAC said let high-risk customers move millions of dollars through the casino. An independent review by the Hon Brian Martin AO KC found in August 2025 that SkyCity Adelaide remained suitable to hold the licence. In June 2026 SkyCity signed a non-binding heads of agreement with the Liquor and Gambling Commissioner, part of Consumer and Business Services (CBS), to settle the review for a A$21 million (approximately $14.7 million) fine paid over two years. According to Inside Asian Gaming, the terms also require an Adelaide board with a majority of directors independent of the parent by 1 January 2028, a dedicated Adelaide chief executive, limits on cash transactions and a ban on junkets. SkyCity said on Wednesday that it is "well advanced" in negotiating the binding agreement.

The Balance Sheet Behind the Sale

SkyCity ended FY26 with net debt of NZ$591 million (approximately $333 million), 3.1 times EBITDA on a covenant basis, and declared no dividend for a second year; it says dividends will return once it is back to positive cash flow. It aims to bring leverage below 2.0 times by the end of FY27, subject to selling the Grand Hotel. The asset sale programme, set at around NZ$200 million alongside a NZ$240 million equity raise in August 2025, now targets NZ$275 million to NZ$300 million before the end of 2026; NZ$74.5 million has been realised, and SkyCity says a binding agreement for the Grand Hotel is expected shortly. It has cut more than 200 corporate roles and targets NZ$30 million of savings in FY27, rising to NZ$70 million in FY28. The New Zealand online licence auction is due to conclude on 14 October.

Adelaide Is Worth More to Someone Else Than to SkyCity

SkyCity's own results slides describe its future as two New Zealand franchises, land-based and online, "with Adelaide standalone". A casino that contributes about 13% of group EBITDA, has absorbed a A$67 million AML penalty, a A$21 million fine and a multi-year remediation bill, and will soon be run by a board with an independent majority is an asset SkyCity controls less and has less reason to fund. For a buyer, the attraction is the monopoly: exclusive casino rights in South Australia to 2035 and a licence to 2085. The obstacle is the regulator. Any purchaser would need South Australian approval, and the settlement's governance terms, which bind the licensee, would presumably stay with the business. That is why finishing the binding agreement first matters: a buyer can price a known fine and a known compliance regime, but not an open review.

The Group Process Is the Bigger Signal

A structured process for the whole group, with advisers engaged to talk to interested parties, is a change of posture from August, when the board said only that it would engage further if the bidders improved their terms. It keeps the two bidders at the table and invites others, while the statement that the approaches "do not fully reflect the underlying value" sets a floor on what the board will recommend. The conditions matter as much as the price. A bidder asking SkyCity to stop selling assets and keep its debt facilities wanted to buy the balance sheet as it was; a SkyCity that has sold Adelaide and the Grand and cut its debt is a simpler company to value. Running the asset sales and the group process side by side lets the board test whether buyers will pay more for the parts or for the whole.

SkyCity has turned a review into a sale and a rejection into a process, and says plainly that neither may end in a transaction. The first test is whether a buyer will pay for Adelaide's monopoly with its regulatory history attached; the next update comes at the annual meeting on 21 October.