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Thursday, 24 September 2009
GuocoLeisure - 2nd attempt at privatization?
Guoco-Leisure (GLL) has surged by more than 50% in the past week. This company was formerly known as BIL International and majority-owned by the Hong-Kong based Guoco Group. Below are some salient points on the company.
Guoco-Leisure (GLL) has surged by more than 50% in the past week. This company was formerly known as BIL International and majority-owned by the Hong-Kong based Guoco Group. Below are some salient points on the company.
* Company’s key assets are: 1) The Thistle hotel chain in the UK; 2) Clermont gaming operations (UK) ; 3) Bass Straits oil and gas royalty stream; 4) Property development in Fiji and Hawaii.
* The crown jewel in GLL is the Thistle hotel chain. GLL used to own 44% of UK-listed Thistle, but in 2003, just at the onset of the Iraq war, Quek Leng Chan (QLC) made a successful attempt at privatizing Thistle, using GLL as his investment vehicle. The exercise was successful and resulted in GLL securing 100% ownership of Thistle. Thistle today operates 38 hotels with total inventory of 8,300 rooms under two brands Guoman and Thistle. Of its hotel portfolio, 16 are owned and leased while 22 are under management contracts.
* Since QLC took over GLL, the focus has been on streamlining the company, divesting non-core investments and trimming down leverage the debt-laden group. In 2002, the group divested a chain of 22 hotels, sharply reducing borrowings in the process. Currently, GLL’s net gearing is manageable at under 0.5x. Thistle has held on to ownership of 16 hotels in London, located at some of the most prime locations in the city.
* Attempts were also made to create new revenue streams at the hotel sites by introducing gaming operations within the hotel premises. The acquisition of Clermont Leisure was a step in this direction. The plan has, however, stalled due to regulatory restrictions on the granting of new casino licenses.
* GLL’s other major asset is a oil and gas royalty stream from Bass Straits. Bass Straits is located in Western Australia, a region rich in oil and gas resources. GLL’s royalty entitled it to a share of all production from this area, which has estimated reserves to last another 20 years. Annual cashflow from this asset has been steady, hovering around US$40m/year.
* QLC is very eager on GLL, and especially its key asset Thistle, it seems. Back in 2005, he attempted to privatize GLL, making a general offer at $1.25. Through that offer and subsequent open market purchases, he currently owns a deemed stake of under 60% via Guoco Group. On the other hand, a US-based fund, Third Avenue, has been trimming its stake from 15% to 10% in recent weeks. Its stake was acquired at relatively high cost of above $1.00/share starting from 2005.
* NAV for the company currently works out to $1.14, implying a 33% discount at current price.
1 comment:
GuocoLeisure - 2nd attempt at privatization?
Guoco-Leisure (GLL) has surged by more than 50% in the past week. This company was formerly known as BIL International and majority-owned by the Hong-Kong based Guoco Group. Below are some salient points on the company.
* Company’s key assets are: 1) The Thistle hotel chain in the UK; 2) Clermont gaming operations (UK) ; 3) Bass Straits oil and gas royalty stream; 4) Property development in Fiji and Hawaii.
* The crown jewel in GLL is the Thistle hotel chain. GLL used to own 44% of UK-listed Thistle, but in 2003, just at the onset of the Iraq war, Quek Leng Chan (QLC) made a successful attempt at privatizing Thistle, using GLL as his investment vehicle. The exercise was successful and resulted in GLL securing 100% ownership of Thistle. Thistle today operates 38 hotels with total inventory of 8,300 rooms under two brands Guoman and Thistle. Of its hotel portfolio, 16 are owned and leased while 22 are under management contracts.
* Since QLC took over GLL, the focus has been on streamlining the company, divesting non-core investments and trimming down leverage the debt-laden group. In 2002, the group divested a chain of 22 hotels, sharply reducing borrowings in the process. Currently, GLL’s net gearing is manageable at under 0.5x. Thistle has held on to ownership of 16 hotels in London, located at some of the most prime locations in the city.
* Attempts were also made to create new revenue streams at the hotel sites by introducing gaming operations within the hotel premises. The acquisition of Clermont Leisure was a step in this direction. The plan has, however, stalled due to regulatory restrictions on the granting of new casino licenses.
* GLL’s other major asset is a oil and gas royalty stream from Bass Straits. Bass Straits is located in Western Australia, a region rich in oil and gas resources. GLL’s royalty entitled it to a share of all production from this area, which has estimated reserves to last another 20 years. Annual cashflow from this asset has been steady, hovering around US$40m/year.
* QLC is very eager on GLL, and especially its key asset Thistle, it seems. Back in 2005, he attempted to privatize GLL, making a general offer at $1.25. Through that offer and subsequent open market purchases, he currently owns a deemed stake of under 60% via Guoco Group. On the other hand, a US-based fund, Third Avenue, has been trimming its stake from 15% to 10% in recent weeks. Its stake was acquired at relatively high cost of above $1.00/share starting from 2005.
* NAV for the company currently works out to $1.14, implying a 33% discount at current price.
Regards,
Han Peng
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