Exit Stage Left for Redcape Hotel Group
Exit Stage Left for Redcape Hotel Group
Australian hotel and pub operator Redcape Hotel Group (ASX: RDC) has announced plans to delist from the Australian Securities Exchange (ASX:), citing a lack of support from institutional and retail investors in the listed market as the company’s main reason to leave.
Redcape is one of Australia’s leading pub and hotel operators. The Redcape portfolio comprises 36 quality hotels (34 Freehold Going Concerns and 2 Leasehold Going Concerns) strategically located across New South Wales and Queensland and has a clear focus on delivering excellent and responsible service, maintaining high-quality facilities, advancing the training and development of its people and contributing positively to the communities in which it operates.
At a meeting in Sydney on Friday, more than 95 per cent of the votes cast were in favour of delisting, well above the 75 per cent threshold required. MA Financial, which owns 39 per cent of Redcape and also manages the fund, did not participate in the vote.
Redcape Hotel Group directors have proposed to delist with a $247 million buyback. Investors now have the option of either transferring their shares to an open-ended unlisted fund that will continue to be managed by MA Financial or sell their shares back to the fund manager at $1.15 each through a $247 million buyback facility.
The board recommended investors accept the offer of $1.15 per share. The unit price is two cents more than in 2018 when it was listed. The buyback program will begin on September 20 and close on October 18.
The proposal to delist was put forward earlier this year when the group released its end of year financial results, with CEO Dan Brady saying the share price did not reflect the value of Redcape’s asset portfolio or investor demand for the sector.
“Support from investors is very high, but in an unlisted sense,” Brady told The Shout, in August adding it was this “irrationality” that led Redcape to “review if the ASX was right the market for us”.
In his address to shareholders before last week’s vote Redcape Chairman Nick Collishaw said: “Since listing in November 2018, Redcape has remained highly illiquid and consistently traded at a discount to net asset value which has been a source of frustration for all security holders.
“The size of this discount has increased significantly over the past 18 months reflecting COVID-19 related uncertainty and other market-related factors which do not relate to the performance of the underlying assets of Redcape.”
While all of Redcape’s NSW venues are closed due to the lockdown, costing about $1 million in earnings per week, the group demonstrated its ability to bounce back strongly once restrictions end, after posting a 52 per cent rise in underlying earnings for the 2021 financial year, 16 per cent higher than the non-COVID impacted 2019 financial year.
Shareholder advocate Stephen Mayne backed the delisting proposal when it was announced calling it a “good outcome”.
“Redcape shares have been trading at a big discount to NTA, partly because Moelis extracts excessive fees. Therefore, allowing minority independent retail shareholders to get out at $1.15 is a good outcome when the stock closed [on August 17] at 94c.
“Redcape retail shareholders should thank Rich Lister David Kingston for agitating for change at the company, particularly in relation to the excessive fees extracted by Moelis,” Mr Mayne said.
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REFERENCES
- Investors vote to delist pub owner Redcape
By Larry Schlesinger
https://www.afr.com/property/commercial/investors-vote-to-delist-pub-owner-redcape-20210910-p58qgh
- Redcape investors vote in favour of delisting
By Andy Young
- Last drinks: Redcape plans to delist from the ASX
By David Simmons
- Redcape proposes to delist
By Marc Pallisco
- PROPOSED DELISTING OF REDCAPE – NOTICE OF GENERAL MEETING
- Redcape Hotel Group Notice of Meeting and Explanatory Statement
https://www.openbriefing.com/AsxDownload.aspx?pdfUrl=Report%2FComNews%2F20210818%2F02408352.pdf