By Clyde Mooney
After suffering body blows that have seriously undermined its profitability, Redcape Property Fund has agreed to enter another exclusivity undertaking with the investor group that attempted to buy it on the cheap in August.
The investors, comprising York Capital Management, Värde Partners. and Goldman Sachs (Asia) Finance (Investor Group), hope to finalise a recapitalisation proposal and restructure of the hotel landlords, who are on the brink of receivership.
The difference this time around is that the Junior lenders, ANZ and Bank of Scotland International, have apparently agreed to a pay-off of their $60 million in debt at 20 cents in the dollar, with unpaid interest summarily dismissed.
A source close to the deal says that the Juniors have consented to the fractional payment, despite having previously rejected a higher offer of 30 cents and bringing about the end of the investor group’s earlier attempt.
In this deal the security stakeholders will be paid $0.0259 for each of their shares, which is a big reduction from the $0.08 offered in August and $3.50 share price seen at the company’s float, but a slight premium on the current trading price of $0.021.
Terms for 'full and final discharge' of both the Senior debtors and interest rate swap provider will be negotiated, with debt likely to be converted into equity at a rate of 0.95 cents in the dollar.
The Scheme Implementation Agreement will be substantially the same as the previous offer in August, with 'such amendments reasonably required by the investor group' – which amount to a tougher offer to an increasingly desperate recipient.
The scheme is subject to regulatory, court and stapled security holder approval, but this is considered largely a formality if the creditors have already given the green light.
An 'independent expert’s report' is to be provided to stakeholders, who will have little choice but sell their flotsam before the sinking ship goes under completely.
On October 12 Redcape’s largest tenant, National Leisure & Gaming, went into receivership, bringing about a technical default in debt covenants that has seen them existing on borrowed time and the good will of the lenders for the past three weeks.