Aquis And Blue Whale Terminate Deal For Casino Canberra

A Case of Missing Documents

Reports of the demise of the deal point generally to the Australian Capital Territory gaming regulatory requirements. The ACT Gambling and Racing Commission was the last step in a journey to Blue Whale Entertainment Pty Ltd acquiring a controlling share of 86.99% of Aquis’ share capital.

Blue Whale planned to acquire Casino Canberra as far back as 2018 for a price of $32 million. Casino owner Aquis Entertainment put the proposal to its shareholders in the beginning of 2019, and they unanimously approved it in March. All other provisions of the proposal were met throughout 2019.

The review by the ACT Gambling and Racing Commission, however, was in progress. No information was released to the public during the process that indicated any reasons for the holdup. It wasn’t until last month that the ACT government said the parties failed to provide the required information.

An ACT spokesperson said, “The proposed agreement and the subsequent decision not to proceed by the parties were commercial decisions, independent of government and the Commission.”

No Deal

There was a clause in the original agreement that stated if all regulatory approvals were not received by December 22, 2019, the transaction between Aquis and Blue Whale could be cancelled with a notice of 10 days.

When the deadline passed in December and the ACT Gambling and Racing Commission had not received the paperwork necessary to access the deal and approve it, the deal fell through.

Aquis revealed that it initially tried to negotiate an extension with Blue Whale. The notice from Aquis said it needed “sufficient time for the Commission to complete its review and the ACT gaming regulatory approvals to be obtained.”

However, Blue Whale declined, which prompted Aquis to seek a $280,000 fee for breaking the deal.

From Hopeful Beginnings to a Frustrating End

Casino Canberra desperately needed a new vision, possibly new ownership altogether. Its 2018 financials showed more than a $2.1 million loss, which was more than an 18% increase over the previous year’s loss.

Aquis tried to work with the ACT government to obtain a license for the addition of pokies to the casino floor. The company originally submitted a proposal to that effect in 2016, offering to give the government permission to redevelop the property in exchange for 500 pokies. Chief Minister Andrew Barr counteroffered with 200 machines with other stipulations, including that the redevelopment happen first. The parties argued back and forth, but negotiations eventually broke down.

The next proposal to the ACT government from Aquis centered around a $330 million bid to redevelop the project. That, too, was rejected.

That was when Blue Whale entered the picture. The company had a business relationship with the investment manager of the SB&G Hotel Group Fund, which owned the adjacent Crowne Plaza Hotel. It was also the group in charge of a $50 million hotel development proposed for a nearby site.

Blue Whale wanted to acquire a majority share of 86.99%, upgrade Casino Canberra, add new restaurants, and cater to a high-roller VIP base of customers.

Meanwhile, the financials for the first half of 2019 came to light and showed yet another loss, another significant increase from the previous year. Revenue was down nearly 3%, EBITDA was down more than 176%, and earnings before tax and interest were down nearly 35%.

Aquis wanted the deal to save Casino Canberra, but more than a year later, the agreement is no more.

Finding a New Strategy

With a clean slate, Aquis reported that the company was upbeat and hopeful. “Following termination of the sale transaction,” Aquis stated, per Inside Asian Gaming, “the board will update the group’s strategies to ensure continual improvement and growth in the business, including consideration of any new business opportunities which may arise.”

The company also noted that the business is “viable” and “cash positive.”

Casino Canberra has yet to comment.