re: + bought darwin casino + SKC 11/02/2004 GENERALREL: 1440 HRS...

re: + bought darwin casino + SKC
11/02/2004
GENERAL

REL: 1440 HRS Sky City Entertainment Group Limited (NS)

GENERAL: SKC: SKC Acquisition of Darwin Casino

SKYCITY Entertainment Group Limited advises that it has entered into a
contract to acquire the Darwin Casino from MGM Mirage Inc. at a purchase price of A$195 million (NZ$220 million). The acquisition will be fully-funded by an additional debt facility to be provided by SKYCITY's existing lending syndicate.

Post the acquisition, the SKYCITY debt:enterprise value ratio is
estimated to be in the order of 30%. Post acquisition, the interest cover ratio is calculated at approximately 4.4 times. Settlement and operational ownership of Darwin Casino is subject to regulatory and Australian Foreign Investment Review Board approvals. These processes are expected to take between two and three months to complete.

The MGM Grand Darwin is a well-presented and efficiently operated facility with A$18 million of capital expenditure committed to the property during the last two years. Apart from minor capital expenditure, much of which will be associated with naming and
branding changeover, SKYCITY does not anticipate any significant immediate post-acquisition capital requirement for the business.

Acquisition of the Darwin Casino and hotel property fits within SKYCITY's core business and will add significant scale to the group's operations overall and to the company's Australian operations in particular.

The Darwin purchase will, when regulatory and other consents have been achieved, mean that SKYCITY Entertainment Group will operate three gaming and entertainment properties in New Zealand, two gaming and entertainment properties in Australia (Adelaide and Darwin) and cinema entertainment venues in New Zealand through its majority shareholding in SKYCITY Leisure Limited.

Post Darwin approvals the SKYCITY Entertainment Group revenue profile is expected to show SKYCITY Auckland comp rising approximately 59% of group total, SKYCITY Adelaide 17%, Darwin 12%, SKYCITY Leisure 6%, SKYCITY Hamilton 5% and SKYCITY Queenstown 1%. Acquisition of Darwin Casino will increase SKYCITY's Australian revenues from approximately 17% to 29%.

The acquisition is earnings per share positive for the SKYCITY group on a preamortisation basis. EBITDA is anticipated to increase by approximately 12% and earnings per share (pre-amortisation) by approximately 9%. The purchase price is calculated at an EV/EBIT DA multiple of 7.3 times.

This calculation includes the community gaming machine allowance rebate which will be discontinued and replaced by a lower gaming machine tax rate in June 2005. A calculation excluding the community machine allowance rebate would indicate a proforma acquisition multiple of 8.9 times.

This latter calculation is prior to any potential synergies which SKYCITY can achieve at the Darwin property. The casino licence in the Northern Territory provides exclusivity until 2015 but there is no certainty as to licensing arrangements after that date.

MGM Darwin attracts approximately 3,000 visitors on average per day and generated revenues for the FY03 year of A$74 million, producing operating earnings (EBITDA) of A$27 million. The MGM Grand Darwin has 3 gaming rooms incorporating 2,200m2 of gaming space, 26 gaming tables and 450 gaming machines, and receives revenue from 50 Northern Territory Keno venues.

The property has hotel and conference facilities incorporating 107 hotel rooms, 4 restaurants and 5 bars. Approximately 80% of total revenues are from gaming.

The economic indicators for Darwin and the Northern Territory are generally favourable and the MGM Darwin is the only licensed casino in the northern part of the Northern Territory. This notice sets out the key features of the acquisition.

Further information on the acquisition will be available shortly on the company's website.