The future of the Redcape portfolio has taken another step, as the Moelis-Meers partnership progresses in its race to own its 26 pubs in New South Wales and Queensland.
The Australian Financial Review reported that Moelis and Redcape have signed a heads of agreement, allowing the next step in the due diligence process. Redcape is believed to be planning completion of the acquisition by the end of March.
Turbulence in global stock exchanges so far in 2016 has all but ruled out the IPO (Initial Public Offering) it was eyeing during 2015.
The changing landscape saw Moelis actually reduce its bid earlier this month to a figure around $620 million – down from the $650 million figure in the wind last year that saw multiple players vie for Redcape’s attentions, including a powerful alliance between Charter Hall and ALH to jointly own and operate the portfolio.
Its owners, New York hedge funds York Capital and Värde Partners, came to hold the pub group after a bailout in the post-GFC battle against LVRs resulted in Goldman Sachs fronting the purchase of Redcape’s embattled holdings and entire senior debt for around 75-cents in the dollar, amounting to over $600 million.
The consequent re-structure saw many of its 71 pubs and two-dozen bottleshops sold off, and it was de-registered from the ASX on 10 May, 2012.
While Goldman Sachs secured its exit from the deal the following year, the other two hedge funds have executed a more gradual strategic sell-off of their interests. In late 2013 HPI (Hotel Property Investments) was spun off in an IPO, taking around half of the remaining pubs. The remainder of the portfolio has been further streamlined in the past two years, with both non-core regional assets divested and new core assets acquired.
York Capital and Värde Partners may therefore choose to not accept the reduced offer for the remaining Redcape pub collection, highlighting the volatility of this kind of asset to dispassionate investment capital looking to move on.
