By Ian Neubauer
The Hedley Leisure and Gaming Property Fund (HLG) has issued a statement in response to a query by the Australian Stock Exchange (ASX) that blames ‘rumour mongering’ for the dramatic devaluation of the company’s share price last week.
HLG shares lost more than a third of their value early last week, falling from $1.48 on Monday to hit 93 cents by the close of trading Wednesday. The shares regained some lost ground following a two-day trading halt HLG put into effect on Thursday, reaching $1.28 by midday today. HLG shares traded at $3.50 each when the company debuted on the ASX in August last year.
“HLG became aware on 5 March 2008 of a rumour that HLG may be, or could shortly become, in breach of covenants in its bank debt facilities. That rumour is baseless, but has been repeated in the media. In the current market environment that rumour could have impacted the price of HLG’s Stapled Securities,” HLG chairman, Colin Henson, said in a statement to the ASX.
Henson assured investors the company has facilities in place to meet its outstanding commitments and explained the Board’s recent decision to review the planned acquisition of seven new pubs.
“Having regard to the changing pub market demographics… the review will cover the ideal type, location and clientele of the pubs currently held and for the future expansion of HLG’s Pub investments in order to maximise returns. A decision in relation to the seven pubs will be made in the near future,” Henson said.
Henson added that HLG is a landlord and its operational performance is not linked to the performance of its tenants. He said HLG “would not expect to suffer material financial loss” in the case a tenant defaults on a lease.