SkyCity Entertainment Group Ltd., New Zealand’s biggest casino operator, rose the most in four months after agreeing to invest NZ$402 million ($334 million) to build a convention center in Auckland.
The center will handle 3,500 delegates on a site near the existing casino and hotel, and should be operating by late 2017, SkyCity Chief Executive Officer Nigel Morrison said in a statement. The stock rose 2.3 percent, the most since Jan. 15, extending its gain this year to 19 percent.
Prime Minister John Key has supported construction of the center in New Zealand’s largest city, saying it will boost tourism and create jobs. The company expects 1,000 workers will be involved in construction and 800 in operation, with an injection of about NZ$90 million a year into the economy.
“The center will provide a venue of the size and shape required to allow New Zealand to finally compete with other countries for our fair share of major international conferences,” said Morrison. “Its a core piece of New Zealand tourism infrastructure.”
The stock gained 10 cents to NZ$4.50 at the 5 p.m. close in Wellington, and earlier traded as high as NZ$4.55.
In exchange for the investment, SkyCity gains an extension of its Auckland license until 2048, Minister of Economic Development Steven Joyce said in a statement. It will be able to install 230 more gaming machines and 40 more tables as part of the pact, he said.
SkyCity expects to spend NZ$315 million on construction and NZ$87 million contributing a 14,000 square meter site. It will fund the project from cash and existing debt facilities.
Extending the Auckland gaming license, which was to expire in 2021, “provides the certainty needed to secure continued long-term financing,” Morrison said.
SkyCity will introduce card-based cashless gaming and can allow 17 percent of its machines to accept bank note denominations higher than NZ$20 as part of the deal. It will add more staff and introduce technology to identify problem gamblers, it said.
The company will get compensation if any of the reforms change during its license period, and if there is an increase in casino taxes prior to four years after the center is finished, it said.