Kiwi casino operator SkyCity Entertainment (ASX:SKC) has warned of an estimated $86.2 million impairment charge on its Adelaide operation. The company has also increased its debt capacity to weather what it expects to be a tough year ahead.
The company attributed the impairment to the impact of new mandatory card play rules at the casino and increased legal and compliance costs.
In June, the company, which also operates casinos in Auckland and Queenstown, suspended dividends and lowered earnings forecasts for this and next year due to declining customer numbers.
SkyCity informed investors of an “ongoing challenging economic environment impacting customer spend” and delays in opening the Horizon Hotel, a major new precinct at its flagship Auckland casino.
The company has now added a small write-down on the value of its Adelaide operation.
Additionally, it will take a nearly $130 million tax adjustment following changes to New Zealand tax laws.
SkyCity also announced the successful refinancing of its debt facilities, extending $NZ465 million of debt across three-, four-, and seven-year terms.
The refinancing, through the United States Private Placement (USPP) program and the syndicated revolving credit facility, replaces debt maturing in the 2025 and 2026 financial years.
SkyCity entered into a note purchase agreement for $NZ247 million of seven-year fixed-term debt and secured cross-currency interest rate swap agreements.
The company also extended the maturities of debt tranches worth $NZ218 million with two members of its bank syndicate.
Following these transactions, SkyCity will have no debt maturing before May 2027, which it anticipates will be when trading in New Zealand and Adelaide returns to normal.