By Clyde Mooney
As a stunned National Leisure & Gaming (NLG) reels into receivership, the industry waits with baited breath to watch what developments are in store for its landlords.
This morning (Oct 12) Redcape Property Fund (RPF) released notification that the appointment of receivers and administrators at NLG has triggered defaults under its Senior and Junior debt agreements.
Under these defaults, provided that two thirds of the banking syndicates agree, the amounts outstanding may be declared immediately due and payable, forcing RPF into receivership.
The Goldman Sachs-led conglomerate of New York hedge funds that includes fast-running investors York Capital and Värde Partners Inc, own 39 percent of RPF’s senior debt, meaning the decision is largely in their hands.
Last week the investment bankers called an end to the procession of debt extensions clouding NLG, and called in the receivers.
As the holders of NLG debt, Goldman Sachs is in a strong position to acquire NLG assets, which include the freeholds to 30 RPF hotels.
However the receivers are legally bound to seek the highest price possible for these assets, which is likely to attract other suitable suitors, such as the Laundy Hotel Group (LHG) who were in negotiations to purchase them only a few months ago.
If RPF are similarly forced into receivership, their distressed assets – including four-dozen Coles-run venues – will flood the market.
Last year this situation occurred with Centro, resulting in poor valuations and sales of Coles venues amounting to less than 10 percent yield.
The events have left hospitality industry pillars struggling to understand the reasoning behind the obvious moves to liquidate RPF, and where the New York players will go from here.