The New Zealand government and SkyCity Entertainment Group are taking another five days to finish up a deal for the casino and hotel operator to build a $402 million convention centre in Auckland in exchange for regulatory concessions.
The parties have extended their negotiations for a second time, and expect the deal to be wrapped up by 11pm on July 5, Economic Development Minister Steven Joyce said in a statement yesterday. They had previously taken an extra fortnight with a view to settle the terms by the end of June.
“We have made good progress on an agreement that runs to a few hundred pages, and it makes sense to take a few more days to ensure all details are sorted,” Joyce said.
Once reached, the deal would then be ratified by legislation, and would go through parliamentary and select committee processes.
The government wants the casino operator to take on the construction, fit-out and land costs of a new international convention centre in the country’s biggest city, and is willing to offer a 27-year extension to SkyCity’s Auckland casino licence and an extra 230 slot machines and 40 gaming tables in exchange.
SkyCity would gain concessions with a net present value of $316 million, according to a base case scenario assessed by Korda Mentha. The value range was put at $261 million to $329 million.
Construction is scheduled to start in 2014 with the centre completed in 2017.
The deal and its negotiations raised ire from problem gaming groups and opposition MPs, who called in the Auditor-General to look at the process.
While the final decision of the government to negotiate with SkyCity passed muster with the Auditor-General’s investigation, the process was deemed to be sloppy, with the casino operator treated differently from rival bidders.
Shares in SkyCity rose 0.5 percent to $4.36 on Friday, and have gained 15 percent this year. The stock is rated an average ‘buy’ based on eight analyst recommendations compiled by Reuters, with a median target price of $4.60.