By Clyde Mooney
Stuart Laundy, director of Laundy Hotel Group (LHG), has told TheShout that a Goldman Sachs (GS) led investment consortium's plans to become the next big player in the Australian pub sector are 'completely unrealistic'.
In a story published by the Australian Financial Review (AFR) earlier this week, the future of hotel hot potato Redcape Property Group (RPG) was reported as looking up with speculation the investor group would use its foothold in RPG to create a third superpower to rival Woolworths and Wesfarmer Coles.
However Laundy doubts this is a viable goal.
GS gained a controlling interest back in May by convincing Westpac to part with a large amount of RPG’s senior debt for around 80c in the dollar.
Recently plans to acquire the junior debt from ANZ and the Bank of Scotland have faltered after the banks insistence on holding out for the full amount they are owed.
Speculation continues that RPG will undergo a major restructure if the investors recapitalise their debt into ownership, which would be a final blow to the already plundered share price.
The restructure will likely precede the traditional hedge fund culture of selling off the pieces to make as much profit as possible.
But sources claim the investors will be remaining involved with the management of RPG for at least the next eight years, telling the AFR: “we’re in the restructuring business, we understand that we have to get our hands dirty”.
TheShout has learned that Wyatt Wachtel, Senior Vice President at York Capital, is even considering moving to Sydney from New York to personally manage the situation.
Laundy said “It doesn’t make sense to us that they would be aiming to become the third force in liquor in Australia. Good luck!”
He points out that the logistical task of competing in such a tight-knit, family-run industry is near impossible, after the raiders forced their way into a situation that both devalued the assets involved and upset two of the biggest player, Woolworths and LHG.
It would appear far more likely that Goldman Sachs, one of the big players behind America’s sub-prime property crisis, would have a money-leveraging goal in mind in preference to a long-term management scheme.
Laundy suggests the New York-based financiers are feigning before the knock-out plan is revealed.
“It’s Muhammad Ali’s ‘rope-a-dope’ all over again… George Foreman thought he had him on the ropes, before Ali came back and took it away.”