Reef Casino Trust in Cairns Targeted by Iris Capital’s $177 Million Offer

The offer comes at a time of increased regulatory and compliance costs for the casino and resort, where revenues in the December half held steady but the trust's profit was expected to be down 19 per cent in the range of $3.2-$3.8 million.

In December it was also announced the casino's CEO Paul McHenry was due to step down by 19 May just under five years after he was promoted in 2020, marking an end to 29 years with the group. A spokesperson confirms he left prior to May.

Sydney-based Iris Capital, via the Iris Cairns Property Trust, has entered into a takeover bid implementation agreement with the trust's responsible entity to acquire all shares at $3.5541 each, representing a 17.69 per cent premium to the RCT closing price on Friday.

The proposal represents more than a 30 per cent premium to the RCT share price on 25 February before the trust revealed it was in talks with Iris, while another suitor Morris Group offered an alternative proposal in April.

In April the trust revealed both proposals from Iris and Morris were worth more than $200 million for "all of the component parts", with the clarification that the amount to be paid for RCT itself would be below $200 million.

This is because the trust's responsible entity Reef Corporate Services Limited (RCSL) sub-leases the property to Casinos Austria International, which operates the casino complex.

Iris Capital has also agreed to buy the operator, Casino Casinos Austria International (Cairns) Pty Ltd, as well as RCSL, but these agreements must become unconditional for the trust acquisition to go ahead. 

RCT also notes that the agreement needs casino and liquor licensing approvals, including with regards to the foundation agreement with the State of Queensland, approval from the competition watchdog, no material adverse changes, and a minimum acceptance condition of 80 per cent.

 Accor and Casinos Austria International, which collectively hold 70 per cent of units, have advised RCT of their support for the offer.

"We are pleased to have reached agreement with Iris in relation to a transaction that will deliver value to unitholders," says independent board committee chair Wendy Morris.

"The independent board committee believes that the offer represents a compelling premium to the recent and historical market price of RCT units."

At the trust's annual general meeting in late May, RCT's chief executive officer Brad Sheahon said that while international tourism had still not quite recovered to pre-pandemic levels, the local and domestic markets had returned to the complex.

"Operations at the complex, including the casino, hotel and food & beverage outlets performed well with aggregate revenues higher at the complex in 2024 than the prior year, with total rentals paid to the trust being $25.2 million," Sheahon said.

"However, regulatory compliance and ongoing inflationary pressures led to increased costs, particularly in respect of the supervisory levy, compliance risk management maturity improvements and payroll.

"Electronic gaming is the biggest contributor to rentals paid to the trust. Electronic gaming continued to perform well due to ongoing patron support from local and domestic markets.

“Table gaming was primarily supported by local and interstate visitors. Grind table gaming results were marginally better than in 2023. However, the premium play result was lower due to a lower win rate and fewer premium players visiting.”