The new owner of Casino Canberra plans to upgrade the facility, including adding new world class restaurants, as part of its vision to reinforce the casino as the entertainment hub of the nation’s capital and attract more visitors.
Blue Whale Entertainment Pty Ltd, owned by Michael Gu, the CEO of iProsperity Group, has acquired the casino in a $32 million deal which will see it become the major shareholder in Hong Kong based Aquis Entertainment.
The deal is subject to shareholder approval by the independent shareholders of Aquis and ACT gaming regulatory approvals.
Aquis flagged the sale only recently when the ACT Government rejected its $330 million unsolicited bid to redevelop the casino precinct, after protracted negotiations broke down over the conditions imposed on the project, including the number of poker machines it would be allowed to operate.
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Blue Whale is associated with the investment manager of the SB&G Hotel Group (Australia) Fund, the owner of the Crowne Plaza Hotel, located adjacent to Casino Canberra on Glebe Park, and the $50 million Holiday Inn Express development proposed for the same site.
Blue Whale told the Australian Stock Exchange that it was excited about the potential future synergies that could be generated for Casino Canberra through this relationship.
“Blue Whale was established as the future of iProsperity Group’s growing leisure and entertainment portfolio and this transaction sets the business in the right trajectory to realise these goals. With our wealth of experience in hotels, we believe this presents the business with a unique opportunity to release this largely untapped market and provide Canberra with more world class experiences,” he said.
Aquis told the ASX that the conversion and extinguishment of a $37 million convertible loan provides immediate value uplift to the Company and removed a medium-term repayment obligation. It provided Aquis with a more efficient capital structure, enabling the company to focus on its growth ambitions.
Aquis CEO Jessica Mellor said the deal provided considerable value to the company and minority shareholders.
“It recognises the significantly improved operating performance of the business and has the effect of removing the existing convertible loan with relatively minimal dilution to minority holders. We look forward to working collaboratively with Blue Whale, who will become Aquis’ majority shareholder if the transaction is approved,” she said.
A casino spokesperson said no further comment could be made until the deal was approved.
A spokesperson for Minister for Regulatory Services, Gordon Ramsay said the deal was a matter entirely for the company.
“Aquis has previously expressed interest in announcements to the stock exchange that it had been engaging in confidential bidding processes. The Minister has not met with any representatives in relation to the acquisition of a casino licence,” the spokesperson said.
The ACT Government would engage productively with any applicant considering redevelopment of the casino.
Aquis first lodged the business case for its expansion plans, that included a resort-style entertainment, dining and retail precinct in the city, in 2016 but negotiations reached an impasse after the Government legislated so the casino could acquire a capped number of poker machines but then sought more detailed financial information about the bid.
However, Aquis said that sticking points included the current legislative framework, which limits the number of pokies to 200 instead of the 500 the casino wants, and the Government deciding not to make certain land available to the casino.
It said the financial information the Government sought could not be provided without the Government in turn providing certainty about key aspects of the proposal including tax rates, licence fees and the legislative framework.
As well as the pokies cap, which would have seen the casino acquire licences from other operators and therefore an overall reduction in the number of licences in the ACT, the redevelopment proposal was also subject to the casino adopting harm-minimisation measures, including mandatory pre-commitment and $2 maximum bets.
A Government spokesperson said at the time that Aquis could still submit a revised unsolicited bid through Treasury’s unsolicited proposals process, purchase an alternative site via a competitive sales process or pursue a smaller development on the existing lease through a development application.
Aquis also announced that current Financial Controller Allison Gallaugher has been appointed Acting CEO effective from 1 January 2019, replacing Ms Mellor, who is stepping down as previously announced due to personal reasons.
It is expected that shareholder approval will be sought in a meeting to be held in March 2019.