SkyCity sells Darwin casino to Delaware North

SkyCity Entertainment said it has agreed to sell its property in Darwin to U.S. company Delaware North for A$188 million ($137 million).

The New Zealand operator said the purchase price is about $8 million above the book value of the business. It added that the Little Mindil property, which is adjacent to the Darwin operations, will be retained by SkyCity and sold separately.

SkyCity has also reached an accord to provide access to the VIP facilities at the casino for its international customers for a period of two years. The two companies have further agreed to set up a joint venture to explore the possibility of an online casino gaming venture based out of the Northern Territory, should Australia change its regulation to permit such activities.

“We see both the international business and the online space as future growth areas for us, so we see value in this outcome,” SkyCity CEO Graeme Stephens said.

He added the company now plans to focus its attention in Australia on its Adelaide property, which is currently undergoing a $330 million expansion plan, which is scheduled for completion in 2020.

The company said it hasn’t yet determined what it will do with the proceeds from the sale, though it is pursuing some strategic initiatives that it expects would generate returns above its cost of capital.

SkyCity bought the Darwin casino in 2002 from MGM Grand and added a new pool, hotel, bars and restaurants. It suffered a $95 million impairment in 2017, but the company said it is now experiencing positive earnings growth on a like-for-like basis.