By Clyde Mooney

Investors are scrambling to take advantage of uncertainty over the future of the Redcape Property Fund as its sale to pub industry stalwart Arthur Laundy appears to have fallen through.

Last Friday (May 20), New York-based investment group York Capital, guided by Australasian international investment adviser Goldman Sachs, pounced on a parcel of debt held by two of Redcape's nine-strong Banking Syndicate.

The deal saw York purchase 39 percent of Redcape’s outstanding $650 million in Senior bank debt at 80c in the dollar, from Westpac and the Bank of Queensland.

The purchase included the voting rights, giving York veto control over any move by the pub freehold proprietor, which must gain consent from its banking syndicate before proceeding with any sale. 

York is expected to recapitalise and there are concerns that equity holders in Redcape may suffer if the restructure is too dilutionary.

Shares in Redcape resumed trading today after the pub group requested and was granted a halt to trading on Friday, when its securities fell nearly 10 percent reflecting concerns over the situation.

It's shares dropped immediately this morning as heavy trading drove them from 24 cents to 19 cents.

Both Redcape and Goldman Sachs have declined to comment.

The Laundy Hotel Group (LHG) were in the final stages of a $330 million negotiation to purchase 20 of Redcape’s 82 venues, with partner Woolworths-ALH set to take over the leaseholds from National Leisure and Gaming (NLG).

The exclusivity period for LHG ran out last Wednesday, and the deal is now in question with York Capital likely to heavily dilute existing unit holdings converting debt into equity.

As yet Redcape has not received the necessary consent from its banking syndicate to proceed with the sale to LHG.

Arthur Laundy has banked with Westpac exclusively for five decades and is furious at Westpac's decision to sell without giving LHG warning.

“It’s all up in the air at the moment – it would be useless me talking to you about anything, as everything might change,” Arthur Laundy told TheShout.

The major parties meet with Goldman Sachs tomorrow to discuss the way forward.

Trading today has already seen Redcape’s value drop by another 21 percent and more than 300,000 shares already off-loaded – more than a dozen times the number of shares traded on Friday.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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