Ann: GENERAL: SKC: SKYCITY signs Heads of Agreeme

• Release Date: 13/05/13 10:30
• Summary: GENERAL: SKC: SKYCITY signs Heads of Agreement on the NZICC
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SKC
13/05/2013 08:30
GENERAL

REL: 0830 HRS SKYCITY Entertainment Group Limited (NS)

GENERAL: SKC: SKYCITY signs Heads of Agreement on the NZICC

SKYCITY signs Heads of Agreement with Government on New Zealand International
Convention Centre

SKYCITY Entertainment Group (SKYCITY) announced today it has signed a Heads
of Agreement with the New Zealand Government to design, build and operate the
New Zealand International Convention Centre (NZICC).

This agreement details the key terms which will see SKYCITY commit $315
million to build and fit-out the NZICC, in addition to contributing the
14,000 square metres Auckland CBD site, bounded by Nelson, Hobson and
Wellesley streets, which is valued at $87 million.

In return for this, the Government will extend the Auckland Casino Venue
Licence for 35 years to 2048 and has agreed to a package of regulatory
reforms.

The $315m development includes public convention and exhibition space capable
of accommodating 3,500 convention delegates at one time, at least 780 car
park spaces and a link-way bridge over Hobson Street. Based on current
anticipated timelines, and subject to the passing of enabling legislation and
a three-year construction period, the NZICC is expected to open in mid/late
2017.

"We are pleased that we have now reached agreement with the Government on the
key terms of SKYCITY developing and operating the NZICC," SKYCITY Chief
Executive, Nigel Morrison says.

"This agreement delivers a major piece of tourism infrastructure for New
Zealand that will boost jobs and tourism and drive long term economic growth,
without requiring funding from taxpayers or Auckland ratepayers. It will
deliver growth for Auckland International Airport, Air New Zealand and other
airlines flying to New Zealand, taxi drivers, restaurant and bar operators,
hoteliers, Waiheke Island, Queenstown and everybody else who in some way,
shape or form provides a service to international visitors," Mr Morrison
said.

The total completed cost of the NZICC development, including land, build, fit
out, and financing costs will be in excess of $400 million, which will be
funded from SKYCITY's operational cash flows and committed existing and
future debt facilities.

Mr Morrison says SKYCITY, one of New Zealand's largest listed companies, is
satisfied that this substantial investment will deliver a reasonable return
for the company's shareholders, 95% of whom reside in New Zealand.

"Most importantly, the extension of SKYCITY Auckland's casino licence for 35
years to 2048 provides the certainty needed to secure continued long term
financing, underpinning our core investments in NZ," Mr Morrison says.

"This project will require around 1,000 jobs during construction and will see
SKYCITY employing an additional 800 New Zealanders once the NZICC is fully
operational. This is good news for the more than 130,000 jobseekers
registered on www.skycitycareers.co.nz seeking a job at SKYCITY. Further, it
will rejuvenate and facilitate other private sector investment in this
important part of Auckland's CBD, the 'Victoria Quarter'," Mr Morrison says.

The Government last month, as part of its $158 million tourism funding
package, announced $34 million would be spent over the next four years to
attract international business events, including conferences, conventions and
exhibitions to New Zealand.

"For the first time, the NZICC will provide a venue of the size and scale
required to allow New Zealand to finally compete with other countries for our
fair share of major international conferences. It will be a core piece of New
Zealand tourism infrastructure that will be a step change for the industry",
Mr Morrison says.

In return for SKYCITY's significant investment, and in addition to an
extension of the Auckland Casino Venue Licence to 30 June 2048, the Heads of
Agreement provides regulatory reform for SKYCITY's Auckland property,
comprising:

oAn additional 230 gaming machines and 40 gaming tables
o12 gaming tables that can each be substituted for 20  automated table game
player stations
oThe introduction of Ticket In Ticket Out (TITO) and card-based cashless
gaming
oUp to 17% of gaming machines and electronic table games being permitted to
accept bank notes with a denomination of greater than $20, but only in
restricted areas
oAn amendment to the Casino Venue description in the Auckland Casino Licence
to encompass all SKYCITY properties in Federal Street.

These regulatory reforms will become fully operative once SKYCITY enters into
a binding construction contract for the NZICC, which is currently anticipated
to be in the second half of 2014.

Given that SKYCITY is committing to such a significant capital investment and
needs certainty to complete and finance the development and earn satisfactory
returns over the longer term, the Crown has agreed to compensation which will
be payable to SKYCITY if:

oAny of the reforms are changed during the extended licence period
oThere is an increase in casino duty (or other tax which applies only to
casinos) prior to four years after the completion of the NZICC development.

Included in the agreement will be additional harm minimisation and host
responsibility measures that add to SKYCITY's already comprehensive
programme. These will include:

oDoubling the number of full-time Host Responsibility staff in Auckland,
providing dedicated Host Responsibility staff onsite at all times, 24/7
oIntroducing predictive modelling technology which analyses player data to
help identify customers most at risk from gambling harm
oContinuing to roll out SKYCITYs Voluntary Pre-commitment Programme allowing
customers to set the time and the amount they wish to spend over a given
period.

"We are well aware that while the vast majority of people gamble responsibly
and treat it as a fun, recreational and leisure activity, there are some who
are at risk of developing a gambling problem. We take this issue very
seriously.  This is why SKYCITY has many systems in place to identify problem
gamblers and offer the support they need. Our programmes are recognised as
world-leading and the most comprehensive in New Zealand.

"SKYCITY is the first commercial casino in the world to introduce predictive
modelling technology and is the first New Zealand casino to implement a
voluntary pre-commitment programme. We started introducing these
world-leading technologies last year when it became clear during our
negotiations with the Government that we needed to further increase our Host
Responsibility measures," Mr Morrison says.

The Heads of Agreement states that SKYCITY and Government have until 14 June
2013 to formalise the agreement and if this date is not achieved, neither
party will have any obligation to the other and this Agreement will
terminate.

Attached is the Heads of Agreement dated 12 May 2013.

For further information please contact:

MEDIA:

GJ Thompson
GM Corporate Communications
DDI: +64 9 363 6467
Mobile: +64 21 392 571
E-mail: [email protected]

Kelly Armitage
Senior Communications Advisor
DDI: +64 9 363 6084
Mobile: +64 27 213 5625
E-mail: [email protected]

INVESTORS:

James Burrell
Chief Financial Officer
DDI: +64 9 363 6047
E-mail:  [email protected]

Aaron Morrison
GM Investor Relations
DDI: +61 88218 4145
E-mail:  [email protected]
End CA:00236114 For:SKC    Type:GENERAL    Time:2013-05-13 08:30:11