UPDATE 2-New Zealand bid target Sky City names new CEO

(Recasts, adds comment from new CEO interview)

By Adrian Bathgate

WELLINGTON, Dec 18 (Reuters) - New Zealand casino operator Sky City Entertainment Group Ltd (SKC.NZ) appointed a new chief executive on Tuesday but reported no progress on a potential NZ$2.9 billion ($2.2 billion) takeover.

Sky City, which has been without a chief executive since late June, put itself up for sale in September after poor results. It has drawn a single, unidentified, potential bidder, but no offer has emerged.

Nigel Morrison, who will take over as chief executive on March 17 next year, will need to focus on lifting the company's performance rather than worry about a bid which may or may not appear, said Macquarie Investment Director Arthur Lim.

"The critical role he is going to have to play is revitalise the company at all levels. By the board's own admission, the company has been allowed to go to seed," Lim said.

Morrison has had 18 years in the industry and is currently chief financial officer of Macau hotel and casino operator Galaxy Entertainment (0027.HK).

Shares in Sky City, the country's sixth-largest listed company, closed on Tuesday down 2 percent at NZ$4.52 in a broader market down 0.9 percent. The stock has fallen about 8 percent this year.

Sky City's chairman Rod McGeoch said a takeover offer was still in the wings as the company advised two weeks ago, when it said a compelling offer was being prepared and the potential buyer was seeking finance.

Sky City has said that one party, who sources have told Reuters is private equity fund TPG [TPG.UL], had conducted due diligence and was interested in pursuing a deal, but was still trying to secure financing for an offer.

A crunch in global credit markets has made access to funding more difficult and expensive, derailing or delaying a number of takeover deals, particularly from private equity firms.

HOLD ADELAIDE

Morrison told Reuters in an interview on Tuesday that he wanted to keep the company's casino in Adelaide, Australia, that it put up for sale in June because of its poor performance.

Morrison said Adelaide casino was a monopoly operation, and Sky City should be able to run it as well as any other operator.

"My personal view is that it should keep that casino."

Adelaide is Sky City's second-largest casino after its Auckland operation, with annual revenue of NZ$133 million and earnings before interest and tax of NZ$15.5 million in the year to June 2008.

Goldman Sachs has said the casino could sell for up to A$380 million ($325 million). Sky City has said it would probably return cash from any sale to shareholders.

Morrison said Sky City was a strong brand with good assets and there was potential to grow the company further.

"There's some key things you can work on, and I look forward to growing revenues while managing the cost structure," he said.

He also said there were opportunities for the company to grow through acquisitions, probably in Asia and Australia.

Sky City owns or has an interest in four casinos and a cinema chain in New Zealand, where a ban on new casinos has given the company a virtual monopoly.

It also has two casinos in Australia, where it competes with Tabcorp Holdings (TAH.AX) and new gaming company Crown Ltd (CWN.AX), controlled by Australia's richest man James Packer. ($1=NZ$1.32) (Additional reporting by Gyles Beckford; Editing by Lincoln Feast)