NLG Sells Pubs to Service Debt

By Andrew Starke

Listed pub operator National Leisure and Gaming (NLG) has completed the sale of two Queensland leasehold pubs as part of a plan to settle debt with creditors.

Magnums at Airlie Beach and The Blue Pacific Hotel at Bridie Island were sold to Australian Leisure and Hospitality (ALH), Woolworths' hotel and gaming joint-venture with hotelier Bruce Mathieson.

NLG managing director Andrew Jolliffe confirmed that the $12.5 million it hoped to raise from the sale of the two properties would be used “largely, but not exclusively, for the repatriation of debt”.

Part of the proceeds will be used to repay NLG’s outstanding debt with the Tom Hedley Family Trust (TWH). NLG is a major tenant of pub landlord Hedley Leisure and Gaming Fund, of which Tom Hedley is the majority shareholder.

However, according to The Australian Financial Review, Hedley will this week become a high-profile victim of the global economic crisis, with receivers expected to be appointed by the Australian and New Zealand Banking Group today. The company owns but does not run its 89 pubs.

Jolliffe said the sale of its two pubs would strengthen the company's capital structure.

“The completion of these two non-core asset sales coupled with the mezzanine debt repayment and consequent reduction in the company’s overall debt levels has been a positive conclusion to what has been a very challenging year,” he said.

NLG shares were at 0.7 cents (Jul 1) at midday today, unchanged from a week ago but down from the 3.3 cents they were trading at on May 28.

[Wed 01/07/2009 02:57:00]