By Clyde Mooney
Goldman Sachs is attempting to pick up embattled hotelier Redcape Property Group (RPG) for a song, says family hotel operator Stuart Laundy.
Monday (July 11) saw the international finance giant make a controversial offer on the piece of the puzzle that will grant them complete control over the flailing RPG.
Representing a consortium of American financiers, the investment group was attempting to buy RPG’s junior debt from the ANZ and Bank of Scotland, which it needs in order to re-capitalise the company and translate the debt into equity.
The offer of just 20c in the dollar was rejected, with the banks stating their determination to hold out for full payment of the loan.
Their intransigence is frustrating Goldman Sachs’ efforts to move forward on their debt for equity proposal, which would lead to a serious dilution of all existing RPG equity and further damage its sinking share price.
Goldman Sachs already bought 39 percent of RPG’s senior debt for a good price from Westpac and Bank of Queensland after months of offers and manoeuvres by RPG’s board.
An industry source quoted Lachlan Edwards, the head of Goldman Sachs advisory hedge fund, as saying that the company will look in every nook and cranny to find more money.
Advisory arm of Korda Mentha and advisor to the junior lenders, 333, has contacted Laundy Hotel Group (LHG) to see if their offer on 20 of RPG’s venues can be re-kindled, and is currently working on an alternate proposal.
The main problem confronting 333 is that an apparently divided RPG board has just granted a third period of exclusivity to the Goldman Sachs consortium on what can only be an incomplete, highly conditional proposal.
The profit-driven nature of the investor group may put the future of a fair outcome for the suffering RPG shareholders in doubt.
Stuart Laundy, director of LHG told TheShout: “At this stage, we are not really sure who can even sell us the 20 hotels. Goldman Sachs is making offers to try and get Redcape on the cheap – they may or may not get back to us. Whether or not we remain at the same price is something we will consider if the situation presents.”