SKC - SkyCity

[Otago K]

A law firm is considering bring a case against SkyCity's former execs over Adelaide money laundering
A litigation funder is considering bringing a legal action against former SkyCity directors and executives over breaches of money laundering laws at the Adelaide Casino.

Litigation Capital Management is considering bringing legal action against former SkyCity directors and officers relating to the company's failure to implement adequate money laundering controls at the Adelaide Casino, leading to the group copping a $67m fine earlier this year.
LCM is considering launching a statutory derivative action against the directors and officers, and is advertising for SkyCity shareholders to join its claim.
A statutory derivative action is similar to a class action, however differs in that any money awarded if the matter is successful flows back to the company.
SkyCity was hit with a $67m fine by the Federal Court in May this year, after admitting to "serious breaches" of anti-money laundering and counter terrorism financing laws.
LCM said it will allege in its proceeding that SkyCity's leaders failed in their duties.
"The proceeding will allege that directors and officers of SkyCity Adelaide breached their statutory and fiduciary duties and/or were negligent by reason of their failure to implement adequate anti-money laundering/counterterrorism financing programs, their involvement in high-risk customer decisions and systemic compliance failures at SkyCity's Adelaide casino," LCM says in an email.
"This proceeding would be supported by LCM (or a related entity), a third-party litigation funder.
"If the claim is successful and financial compensation is recovered from the proposed defendants, legal costs payable and a funding commission for the litigation funder will be deducted from the recoveries, with the remainder paid to SkyCity for the benefit of its shareholders.
"The costs deducted from the recoveries will not exceed the amount of compensation to which the SkyCity may become entitled."

Whilst I see the reality of this might be correct that there is some real dereliction of duties, the only ultimate result I can see is it will be of a greater litigate environment being a cost handed on in one way or another to shareholders, potentially, higher risks of directorships mean higher personal liability insurance costs, that will be covered by higher director fees expected. Is the behaviour not best left to regulatory bodies. Costs will likely swallow any shareholder equity recovery, you would be paying and enabling someone to potentially achieve very little for you.

[Auto Rower]

Whilst I see the reality of this might be correct that there is some real dereliction of duties, the only ultimate result I can see is it will be of a greater litigate environment being a cost handed on in one way or another to shareholders, potentially, higher risks of directorships mean higher personal liability insurance costs, that will be covered by higher director fees expected. Is the behaviour not best left to regulatory bodies. Costs will likely swallow any shareholder equity recovery, you would be paying and enabling someone to potentially achieve very little for you.

Totally agree with that Otago ,and I cannot understand the drivers of this at all the only winners again will be LCM & its legal team ,this is what is dragging down the West, Asia will be falling over laughing

[Waltzing]

could go on for a while and insurance is the COVER they will want to duck for...

cant see many smaller share holders wanting to join. the big holders probably shorted the shock...along with others...

in the long run its to small to bother with really.

its the cost of operating a business like that..

bit like the racing game..NZ shutting down the hounds ...for different reasons of course.

[entrep]

Lowest close since the year 2000 for this ABSOLUTE DOG

These idiots couldn't make money if they were the only casino in town (oh wait, they are).

[KW]

Star said the introduction of mandatory identification cards and restriction of cash use on the gaming floors has led to a 17 per cent decline in average daily revenue when compared to the daily average four weeks before the first stage of restrictions were implemented late August.

Customers at Star's Sydney flagship and Crown Resorts' Barangaroo casino can gamble up to $5000 in cash every day under existing state laws but the figure is meant to fall to a $1000 limit in August.

[Plata]

Was looking at this one recently, seems really hard to see how this could surprise to the upside in the next year or so. Really is only risks, bar a small asset selling for a good price to get that debt/editda ratio looking less covenant threatening.

[Plata]

The other thing that occurred to me with the carded play is the disadvantage this puts the casino at vs smaller operators with just a few pokie machines around Auckland. For better or for worse problem gamblers are probably some of the more profitable customers and these are the exact people that may be alienated to quieter, less regulated corners of the country for their gambling fix.

[Gerald]

From an AU fund:

Sky City (ASX:SKC) owns and operates the (monopoly)
casino and entertainment complexes in Adelaide and
Auckland.

Despite the challenges faced by Crown and Star, SKC has
been able to broadly avoid the type of controversy faced
by its competitors. The same cannot be said for Sky City's
share price, which has fallen from as high as $4 before
COVID19 to as low as 82c as at 30 June 2025.

Sky City have suffered from a number of problems, some
global and some of their own creation:
• Due to recent controversies, the sector is deeply
unloved,
• The fear of regulatory issues (both known and
unknown) has accentuated investor concern
• One off costs require 'normalisations' for an accurate
depiction of performance,
• Due to the impacts of COVID, the slow economic
recovery, and their debt position, dividends were
recently suspended.

The business has generated solid returns over the last
couple of years, generating 17.5c of earnings last year
(against a current share price of 83c).
Driven by the two casinos, their convention centre in
Auckland, the newly established online casino business
and Auckland's Sky Tower (and carpark), we anticipate EPS
of 16c for FY27 which puts Sky City on a PE of just 5x.

Notwithstanding the value apparent from the company's
earnings and the prospect of the re-introduction of a
dividend, we expect SKC to drive significant value for
shareholders via the sale of their non-core assets (Sky
Tower and carpark). The tower and carpark alone are
expected to generate $415 million or almost 65% of the
existing market cap.

Given our expectations for the sell down of assets, the
repayment of debt, and the re-introduction of a dividend,
we believe there is upside in this unloved business.
Historically SKC has traded on a PE multiple of
approximately 17x earnings. If instead we apply a PE of
just 12x, the shares ought to be trading at $1.90. We think
this is conservative given the upside potential for the
business.

[Plata]

Wow that is a bullish assessment. It sounds so strange to me the idea of sky city selling its namesake tower, and did they not only just recently buy the carpark back? That being said, if you are looking at the covenant issue the most effective way to reduce debt to editda is to sell the asset with the highest value/ebitda which I imagine is the car park. What circumstances led to the carpark sale last time?

[anotherday]

heading to 20 cents range

[Left Field]

Latest in the saga of Adelaide Casino etc......... talk about grovelling and humble pie

https://www.nzx.com/announcements/456642

Disc - don't hold... but good for a laugh.

[Basil]

Julian Cook has his work cut out for him as chair of this sick puppy.

[entrep]

Halted for a cap raise.

For a second thought my dreams had come true and someone was making a play for this DOG, but no.

[winner (n)]

Funny a den of iniquity needs more cash .... A bit like a kid asking Mum for more pocket money

[Basil]

Funny a den of iniquity needs more cash .... A bit like a delinquent child asking Mum for more pocket money

Fixed that for you 
Julian Cook as Chair a smart operator and knows if he doesn't hand around the begging bowl now in conjunction with the results announcement the capital raise could be even more dilutive in the future.
The say the house never loses but in recent times that doesn't appear to be the case. I note that since they listed in 1996 it climbed to a high of $4.10 in October 2007 and yet here we are 18 years later and the shares are just $1, approx 25% of that figure.  With all the new AML requirements, you could say this is an industry in systemic decline...