By Clyde Mooney
After a failed attempt to convince junior lenders to accept an offer amounting to $7 million for their $72 million of current debt, the Goldman Sachs-led investment consortium bid is rumoured to be suffering inner turmoil.
In May the investors from New York aggressively bought 39 percent of a flailing Redcape Property Group’s (RPG) $650 million Senior debt from Westpac, within hours of an exclusivity period with Laundy Hotel Group expiring.
In June they quietly bought the Senior debt of RPG’s tenant, National Leisure and Gaming (NLG), knocking another 30 percent off NLG’s share price in the process.
In July they made a low-ball offer for the whole of RPG to purchase 100% of the shares for $0.08c, refinance the senior debt and repay the junior lenders just 30c in the dollar.
With a September 30 debt amortisation looming, the consortium graciously waived the upcoming end of financial year payment lest the broke RPG slips quietly into liquidation.
Caught between a minimal offer and financial oblivion, RPG’s board announced their endorsement of the offer and recommended the shareholders accept the buy-out.
The pressure was then on the junior lenders, ANZ and Bank of Scotland International (BOSI), to accept the offer by the deadline, or risk getting nothing as the liquidated company was sold off and the junior debt-holders paid last.
Yesterday came the announcement that ANZ and BOSI would not accept the offer.
RPG’s board was then forced to request a halt to trading from the ASX as the pub landlord’s future now looked seriously in doubt.
Rumours abound that the juniors have fought back and accepted an improved rival offer from a group possibly involving Pitt Capital (the public face of Souls Private Equity Limited), Investec, and the recently shunned Laundy Hotel Group.
The collapse of the consortium’s bid now allows other offers to be presented to RPG’s board.
Industry sources believe that this new group would be better positioned to restructure and revitalise the embattled pub landlords and are now in a far better position than ANZ to call shots in any upcoming battle.
With the massive pool of funds and expertise available to the likes of Pitt Capital and LHG, Goldman Sachs’ investors could find the hardball tactics going in the other direction.
The same sources told TheShout that the Americans are now disputing the wisdom and validity of the entire exercise.