By Andrew Starke

The Hedley Leisure and Gaming Property Fund (HLG) has had its Australian Stock Exchange (ASX) suspension lifted after belatedly filing annual results.

The pub group will cease to use the Hedley moniker from November when it will recommend to shareholders that it adopt the name Redcape Property Fund.

HLG revealed a $178 million annual loss and its future is now effectively in the hands of a nine-bank syndicate, led by the Australian and New Zealand Banking Group, thanks to debt of about $740 million.

At June 30, HLG had a loan to value ratio (LVR) of 76.4 percent as a result of write downs in property value. This is a breach of the LVR covenant of 75 percent in HLG’s loan agreements with its banking syndicate.

“The audited financial statements of HLG have been prepared on a going concern basis but it must be recognised that HLG depends on the continuing support of its banking syndicate,” said HLG executive chairman, Colin Henson.

Of HLG’s $178 million loss, $93 million was in property write downs with all but one of the trust’s 34 NSW hotels now worth less than their cost price.

The Canterbury Hotel is one example of how the trust’s assets have depreciated. A fall in gaming revenue is being blamed for the pubs decline in fortunes – it was acquired in July 2007 for $25.28 million, valued at $13.5 million in July 2008 and is currently valued at $7.5 million.

HLG’s reaction to date has been to quietly put a $400 million pub portfolio on the market, with some deals expected to be concluded later this month (October).

The Canterbury Hotel, the Lidcombe Hotel and the Bridgeview are likely to be amongst the first to sell with the former belived to have already attracted an offer of $8.85 million from the Murphy publican family.

However, pub operator National Leisure and Gaming (NLG) will have first rights to acquire any pubs in the portfolio being sold.

HLG shares were trading at 25.5 cents at midday today (Oct 2), down from the 27 cents they were trading at before the company’s suspension on September 1.

The Shout Team

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

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