The New Zealand casino operator SkyCity Entertainment (ASX:SKC) has warned of an estimated $86.2 million impairment charge for its Adelaide operations. The company has also increased its borrowing capacity to weather what is expected to be a difficult year ahead.
The company attributed the impairment to the impact of new mandatory card game rules in the casino as well as increased legal and compliance costs.
In June, the company, which also operates casinos in Auckland and Queenstown, suspended dividend payments due to falling customer numbers and lowered its profit forecast for this year and next year.
SkyCity informed investors of a “continued difficult economic environment impacting customer spending” and delays in the opening of the Horizon Hotel, a key new part of its flagship casino in Auckland.
The company has now taken a small write-down on the value of its Adelaide operations.
In addition, a tax adjustment of almost $130 million is required due to changes in New Zealand tax laws.
SkyCity also announced the successful refinancing of its credit facilities, extending NZ$465 million of borrowings to three, four and seven year terms.
The refinancing through the United States Private Placement (USPP) program and the syndicated revolving credit facility will replace debt due in fiscal years 2025 and 2026.
SkyCity entered into a NZ$247 million seven-year fixed-term promissory note purchase agreement with secured interest rate swap arrangements.
The company also extended the maturities of debt tranches valued at NZ$218 million with two members of its banking syndicate.
Following these transactions, SkyCity will have no debt maturing before May 2027. The company expects this to be the case when trading in New Zealand and Adelaide returns to normal.
