A mercy bid?
Shareholders in struggling Brisbane-based Oaks Hotels and Resorts could have received a welcome ‘get out of jail card’ via a well timed offer from a big Thai-based tourism operator and investor.
Oaks shares have weakened in the past month and more on news of a boardroom struggle that saw the founder Brett Pointon ousted after receivers were appointed to two of his private companies.
In fact they slumped more than 13% last week after the board got rid of Mr Pointon.
Yesterday they jumped by almost 30% after Bangkok-based hospitality company Minor International Public Company made a takeover offer for the company.
Minor International made an off-market cash takeover for all the shares in Oaks in a statement to the ASX.
The company says it will offer Oaks shareholders 35c for every share held, a 35% premium on last Friday’s closing share price of 26c.
That saw Oak’s shares jump to 34.5c, before easing back to close at 33.5c, up 7.5c on the day, or 28.8%.
That values the company at $61 million and with its debt, at a total enterprise value of $129 million. The shares have a high for the last year of 48c.
Receivers were appointed in late January to two of Mr Pointon’s private companies – Centrepoint Holdings and The Oaks Apartment Management – which together hold a 34.2% ($16 million) stake in Oaks.
Minor International said it had already bought a 19.96% stake in Oaks, 5% of which was subject to Foreign Investment Review Board approval, as will the bid as a whole.
That stake came from Mr Pointon (5%), while a current Oaks director David Wu sold a 14.96% stake.
"The 31 December 2010 accounts contain a statement from Oaks’ auditor about the inherent uncertainty regarding Oaks’ ability to continue as a going concern, and disclose a deficit of current assets to current liabilities in excess of $A60 million," Minor International said in the statement.
Oaks property portfolio includes CBD apartments properties, resorts and villas in Australia, New Zealand and Dubai and has a market capitalisation of $45.2 million.
Minor International has a market capitalisation of $US1.1 billion, owns 33 hotels in eight countries, along with many other interests including a 50% stake in The Coffee Club brand.
In a very brief statement to the ASX last week announcing the management changes, Oaks directors said.
"Oaks Hotels and Resorts Limited announces that Mr Brett Pointon’s employment contract as Chief Executive Officer of Oaks has been terminated effective immediately."
It didn’t take Mr Pointon long to make his views known by way of the sale of some of his stake to Minor.
In Oaks’ interim profit better trading results were revealed:
"Oaks Hotels & Resorts today announced a record first half FY2011 performance with a 34.4% increase in EBITDA from core operations to $19.1 million.
"The Company also recorded a 45.2% increase in Net Profit After Tax of $6.0 million, up from $4.2 million in the previous corresponding period.
"Chief Executive Officer, Brett Pointon said the first half results represented the strongest trading performance growth in Oaks’ history.
“During the first half of FY2011, Oaks achieved average occupancy rates of 80.5%, compared with 76.1% during the previous corresponding period. Over the same period, the average room rate achieved was $156.09, compared with $143.21 in the same period last year.
"Mr Pointon said “the strength of Oaks’ performance is a direct result of a complete operational restructure in 2009. This restructure resulted in a strengthened management team and increased capability on our hotel frontlines. We are now experiencing the impact of these changes on our results.”
"Unfortunately, as a result of our banking constraints, we are not able to declare an interim dividend."
In February, around a month after Mr Pointon’s two companies went into receivership, the receivers called for expressions of interest in the 34.2% stake in the two companies held in Oaks.
Results of that call are not known.
