Sharechat Logo

Sky City's Canbet gamble misfires

By Nicholas Bryant

Friday 25th August 2000

Text too small?
Sky City's decision last month to take a 33% shareholding worth $50 million in online wagering company Canbet has backfired and investors have dumped the stock.

The value of Canbet's shares has plunged 45% from a high of 32Ac last month to 17.5Ac on Wednesday since news broke of possible relaxing of online gaming laws in the US. Canbet is principally owned by entrepreneur Eric Watson and 70% of its business emanates from the US.

Market analysts earlier warned more liberal gaming laws would lead to a proliferation of online gaming companies in the US. They argued this would substantially reduce Canbet's business.

The deal with Canbet sees Sky City initially paying $A5 million before the end of August for 16.67 million new shares at 30Ac each. This equates to a 6.8% stake and comes with free options on a 1:1 basis at a strike price of 20Ac. The options can be exercised anytime before March 31, 2002.

Sky City will take up the remainder of its shareholding in October when the first payment is made. A second payment is due 12 months later. Sky City will be issued additional options on the same terms as the August placement, boosting its shareholding to 33%.

In announcing Sky City's annual results last week, managing director Evan Davies declined to comment on the specifics of the Canbet investment but he indicated a greater interest in online gaming ventures was a strong possibility.

Market analyst Frank Fernandez said it was unlikely Sky City would be realising its Canbet options "in a hurry" with the strike price now sitting higher than the share price.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar weakens on global tensions, weak local manufacturing
General Capital (GEN:NZ) releases strong preliminary result
Burger Fuel turns to profit as it changes direction
Contact secures winter gas from OMV
Arrow International liquidators find $40M of notional assets
Forestry encroachment an issue for councils - Sage
NZSA concerned Kiwi Property paying too much in dividends
NZ food prices rise an annual 1.7% in May, rental inflation steady
Provincial centres lead the way in UFB uptake
Manufacturing grows at slowest pace in more than six years

IRG See IRG research reports