New Zealand’s SkyCity Entertainment Group announced early Thursday that it has determined to suspend dividends for the remainder of 2024 and throughout 2025 as it looks to protect its financial state due to challenging economic and regulatory conditions.
In a filing, the company said the decision was made in order to maintain “prudent levels of committed liquidity headroom” with respect to its Debt/EBITDA covenant of 3.75x within its financing agreements, particularly with an AU$67 million (US$45 million) AUSTRAC civil penalty looming for past AML failures at SkyCity Adelaide and another NZ$76 million (US$47 million) committed for completion of the New Zealand International Convention Center at SkyCity Auckland.
SkyCity also revealed that it has revised down its earnings guidance for FY24.
“SkyCity now expects underlying Group EBITDA for FY24 of between NZ$280 million and NZ$285 million (US$173 million to US$176 million) and underlying Group NPAT for FY24 of between NZ$120 million and NZ$125 million (US$74 million and US$77 million),” it said. Previous guidance had underlying Group EBITDA pegged at NZ$290 million to NZ$310 million (US$180 million to US$192 million) and underlying Group NPAT at NZ$125 million to NZ$135 million (US$77 million to US$84 million).
According to Thursday’s filing, the new forecast is due to the “ongoing challenging economic environment impacting customer spend”, a further delay in the opening of the Horizon Hotel at SkyCity Auckland and a potential increase in Adelaide casino duty expense related to a recent court ruling on the treatment of loyalty points.
Despite such challenges, the company added that it expects to resume the payment of dividends from FY26.
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