SkyCity Entertainment Group has inked a construction contract with Australian commercial construction company Hansen Yuncken for expansion of its Adelaide Casino.
New Zealand's only listed casino company said the contract is a largely lump sum, fixed-price contract and the "agreed commercial terms provide significant risk protection for SkyCity." According to the release to the stock exchange, about 90 percent of the costs are fixed and the remaining 10 percent includes provisional sums within SkyCity's control for things such as fit-out and furniture, fixtures and other equipment.
The new expansion project has a budget of about A$330 million, including appropriate contingencies, in-line with previous guidance. It includes significant expanded gaming and entertainment facilities, a boutique all-suite hotel, additional signature restaurants and bars and cafes as well as an enhanced facade emphasising heritage aspects of the building.
SkyCity said it remains "confident in (the) investment thesis for Adelaide" and expects "to deliver an acceptable return on the project".
Hansen Yuncken is privately owned with a significant presence in Adelaide and was involved in the initial scoping and development of Adelaide Casino in 1985, which converted the ground and first floors of the Adelaide Railway Station building into gaming areas, and the second floor into administration, kitchen and restaurant facilities.
The main construction works are to begin in June with completion expected in the first half of 2021. The contract is largely for the build only, with design responsibility primarily with SkyCity.
The shares last traded at $3.95 have dropped 4.8 percent so far this year.