For over a year, SkyCity has been making plans to expand its Adelaide Casino property with a $300 million development. Now, the company has had to put the project on hold by at least a year due to a wide range of complications. It is thought that the redevelopment of Festival Plaza has had an impact on the planning approvals for SkyCity Adelaide Expansion.
The project will mark the first time in 40 years that the area will have a makeover, and it will cost upwards of $1 billion. The new city centre will be integrated with various facilities like the Adelaide Oval, Adelaide Railway and Festival Centre, which is the same area in which the SkyCity Adelaide Expansion will occur. So, it is likely that the two projects are conflicting.
Another reason seems to be that more funds are needed to make the planned development project a reality. SkyCity has recently launched a capital raising effort for over $243 million. It will help to fund the Adelaide expansion project and to benefit other ventures.
“The new equity is expected to provide sufficient funding capacity and headroom to fund major growth projects and maintain (BBB) credit rating,” reads a statement from the company. At the moment, SkyCity is offering shareholders the chance to buy one share for every 10 that they currently hold at $4.40, and trading is expected to resume next week.
Financial experts are pleased with SkyCity’s plan to raise capital, as this solution allows SkyCity to maintain ownership of its assets will addressing its debt issues. "They maintain ownership of what will be a core business asset - the Hobson St hotel - and also de-risk the business and reduce gearing by taking advantage of a healthy share price. Very smart," says Chris Gaskin, Porfolio Manager at Devon Funds.
The SkyCity Adelaide expansion feature a luxury hotel with 80 rooms that overlooks the River Torrens. It will also include VIP gaming suits and restaurants from world-renowned chefs. The casino gaming floor will also be expanded with the inclusion of 500 new poker machines and 100 new gaming tables.
The expansion will be a major benefit to Adelaide’s casino and tourism markets, bringing millions of dollars for the local economy. Another benefit is the creation of thousands of jobs for local residents. Unfortunately, South Australian will have to wait, as the opening of the renovated casino will be pushed back from 2018 to 2020.