LANTERN VOTES TO SELL THE LOT

In Finance by Clyde Mooney

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Lantern Hotel Group’s AGM yesterday saw shareholders pass a resolution to sell down the remaining six properties in the portfolio, meaning more key assets to meet a starved market.

Following successes divesting all its ‘non-core’ pubs in line with the mandated turnaround strategy for the flailing company, achieving an 18.5 per cent premium to book value for properties amounting to $60 million, the Board proposed the market conditions favoured continuing the process and getting top-dollar prices for the remaining assets.

These had been deemed ‘core’ to its future strategy, due to their meeting key criteria, including consistency in gaming. But the combination of the appeal of these pubs, coupled with a shortage of owners willing to part with them, both in the climate of historically low interest rates and vast amounts of inquisitive investment capital, has proven hard to resist.

“Given the strong market for gaming led hotels, the Board believes there currently exists a real opportunity to realise premium value on the Group’s property portfolio,” stated Chairman Graeme Campbell at the meeting.

“The passing of the Sell Down Resolution is intended to give the Board maximum flexibility to consider all offers that it may receive from interested third parties, including the option of selling the Group’s entire property portfolio.”

This was made apparent with the recent sale of the last ‘non-core’ pub, the Commodore Hotel, fetching an impressive 46.5 per cent premium to its book value at 30 June, 2016.

Yesterday’s shareholder meeting was the listed Lantern Hotel Group’s Annual General Meeting, as well as a General Meeting of Lantern Real Estate Trust, called to determine a consensus to the Board’s Sell Down Resolution.

The options put forward were:

  1. Retaining and investing in the core hotels
  2. Creating further scale through the acquisition of further hotels that meet the strategic criteria of the Group
  3. Sale of the Group, or the business and assets of the Group
  4. Expanding the current divestment programme to include the core hotels

Shareholders voted 57.74 per cent in favour versus 41.94 per cent against, passing the Sell Down option.

Anticipating this result, the Group has already listed two of the final six; both top gamers, the Ambarvale Hotel in Campbelltown district, and Uncle Buck’s in Mount Druitt.

The Sell Down Strategy advises the remaining core venues will be divested within the coming 12 months, at which time the Board will consider the Group’s options, both in terms of remaining as a listed company and remaining in business at all.