Chris Morris ups Cairns’ Reef Casino offer to $192m
Rich Lister Chris Morris has seen rival bidder Sam Arnaout’s revised $185.3 million bid for Cairns’ Reef Hotel Casino and raised his offer to $191.7 million, a day after the property developer sought to outbid Morris with a higher offer of his own.
Morris, the Computershare-founder-turned-hospitality-asset-owner, said his increased $3.85-a-share bid for Reef Casino Trust aimed to boost a portfolio of northern Australian assets that includes the Nautilus Aviation fleet of 44 helicopters and Townsville’s Ville Resort-Casino.
“We’ve got … all the helicopters,” Morris said on Thursday. “We’ve got the casino in Townsville, which is quite close.”
Reef Hotel Casino is a minnow in the pond dominated by Blackstone-owned Crown Resorts and Star Entertainment but, like them, is facing the burden of higher costs due to regulator-driven increasing harm-minimisation and compliance requirements and processes.
Hit hard by COVID-19, international visitor numbers – including from China – have not recovered to their pre-pandemic level, lowering revenue from premium players in the six months to December. The casino made more money in the first half from pokies than other forms of gambling.
The board was due to approve earnings figures for the six months to June on Thursday evening, and publish them late Thursday or on Friday, chief executive Brad Sheahon said.
One requirement on Queensland casinos was to increase revenue from tourism activities, and Morris said his record in boosting tourist offerings at Townsville’s Ville Resort-Casino made him better suited to do that than Arnaout’s Iris Group.
“We’ve been very successful transforming the Townsville casino into a holiday destination,” he said.
“There’s a lot of stuff to do with casinos these days, with compliance and everything else. I feel strongly we’re in a better position than Iris to manage that,” Morris said.
“The fact we’ve already got a casino licence in Queensland means probity will be a little less than they’d have to go through with Iris.”
Morris also owns Orpheus Island north of Townsville after buying it in 2011.
Bids and counter-bids
Thursday’s announcement was the latest blow in a takeover stoush that started in February, when Iris made its first, undisclosed, offer that crystallised as a $3.55-a-share, $177 million offer in mid-July that the casino company’s board recommended.
Morris, who made his first approach in late April, countered with a $3.70-a-share, $184 million offer at end-July. Arnaout lifted his bid to $3.72 a share or $185.3 million on Wednesday, which also carried the recommendation of the board, subject to there being no higher proposal.
On Thursday, the trust said its independent board committee and advisers would consider the revised Morris proposal.
The shares in the casino company majority owned by Accor and Casinos Austria International – which together own 71 per cent – were trading up 1¢, or 2.7 per cent, at $3.77 on Thursday afternoon, after gaining 3.4 per cent on Wednesday.
Arnaout was contacted for comment.
The Cairns casino that started operating in January 1996 struggled in early years and was kept afloat only with a $70 million recapitalisation in 1999 by shareholders Casinos Austria and Accor, which took over management of the hotel at the complex.
The casino only paid its first dividend to shareholders the next year.
Over the past five years its shares have risen 71 per cent, ahead of the S&P ASX 200 index’s 48 per cent gain.
