SkyCity board faces grilling on takeover bid on Home Services

Jan

SkyCity board faces grilling on takeover bid

posted by admin in Window Cleaning

Shareholders are becoming increasingly concerned at the ability of the company’s directors to turn its performance around in the absence of a permanent chief executive. Sky City currently has just five directors. One of those, Elmar Toime, has been acting chief executive since the departure of CEO Evan Davies in June. Three others, Australia-based chairman Rod McGeoch, deputy chairman Patsy Reddy and non-executive director Sir Dryden Spring, are now trying to shake out merger and takeover offers for the company, while fifth board member Bill Trotter is executive chairman of First NZ Capital, which is advising the board on takeover matters. That increasing focus on a possible takeover is causing disquiet in some quarters. “Sky City is not performing well and needs a bloody good enema. It needs a good CEO to go in and clean it out,” said one market source. “The board should do that and not sell the business off. The board should have the wherewithal to say: `This is a good business and we can make it better.”‘ However, the arrival of a new chief executive any time soon is looking increasingly doubtful. ASB Securities analyst Stephen Wright said the focus on a possible takeover would delay the whole recruitment process. “It will slow that down. They are probably not going to try as hard (to appoint someone) at least until they’ve resolved the issue of a potential takeover. “On the other hand, it’s certainly not going to be as attractive for any CEO that’s floating around out there. Why would anybody want to go there when potentially they are going to be sold. So Toime is probably locked in there for a while,” he said. Wright said the fact another company was undertaking due diligence on Sky City implied it believed it could do a better job improving the company’s performance than its existing management. “In some respects you could say (the board) have given up. I guess what they are saying is that they potentially have one buyer on the hook, so instead of just getting alongside him like Auckland International Airport did with Dubai Aerospace Enterprise, they are going to check out anyone that’s looked at them or is in the same industry, for other potential bidders before they wrap themselves up too closely with whoever is doing due diligence.” Forsyth Barr analyst Jeremy Simpson said there was a window of opportunity for potential bidders to make a takeover offer, because Sky City’s shareholders would probably have to wait until the company released its interim results in February before they could judge how well its plans to revive the fortunes of its Auckland casino were working. If the results of the refurbishment of the Auckland casino were encouraging, that would be likely to push up the share price. “So the timing (of a potential takeover) is quite good from that perspective, because they may be able to get it a bit cheaper than they could have six months earlier (when the share price was high) or in six months’ time when we’ll get a better idea about how the Auckland refurbishment has gone, and that’s pretty crucial,” Simpson said. “Auckland (casino) is a great asset, but it hasn’t been managed as well as it could have been in the last few years. Possibly they also spent a lot of time focusing on their non-gaming stuff in Auckland, like building the new hotel and convention centre. They’ve done a great job with those, but they’ve probably taken their eyes off the ball of their key customer base. But once Auckland’s been refreshed, I think it’s going to be in a pretty strong position.”