LONDON, June 8, 2011 /PRNewswire/ --
We are minority shareholders in the Company, and have been since
launch, owning in total 5.5% of the issued share capital. We are
appalled at recent events culminating in the Board disposing of the
Company's six hotels at a price equal to 28.4% of their net asset
value. This represents a cap rate of almost 30%, a price per room
of GBP44,000 or GBP67 per square foot of gross floor area. This
is an historic low valuation in the leisure hotel market according
to Alchemy Japan, a competitor of the Company.
Despite the difficulties of dealing with an 87.5% majority
shareholder, the Board must take its share of the blame for this
disastrous outcome. The Board knew in early 2010 that the DKR Oasis
hedge fund was to be liquidated and that its shares in the Company
were a significant part of that portfolio. However the Board failed
to retain the services of a broker who could market the company to
a wider range of investors than those institutions who had been
contacted during the IPO process. In fact no significant marketing
of the Company has been undertaken in Europe since 2009.
The Board says that the current business is not large enough to
support the central overheads but the Company bought a hotel out of
operating cash flow in 2008 and paid a 1p per share dividend in
2010, with a higher figure projected in 2011 according to
independent research. Since the IPO in 2008, the Company's net
asset value has risen by 62% in sterling terms, a record of some
merit compared to many international funds listed in London. That the share price has fallen by 54%
during the same period is evidence that the Board has failed to
promote the Company adequately.
When it came to the current transaction, the Board failed to
engage a financial adviser to manage the process and advise on
tactics, relying on the Nomad to advise on the AIM rules and the
Majority Shareholder to conduct an auction, a job for which he was
clearly unqualified. We believe the erratic conduct of this process
led to a number of credible buyers withdrawing, when they might
have made proposals more favourable to the minority
shareholders.
We made it clear to the Board that the minority shareholders did
not wish to participate in a fire sale of assets and preferred to
retain a shareholding going forward. Our preference was to leave
the Company listed and obtain finance for the Company to buy in the
DKR Oasis fund's shares for cancellation. Alternatively, the DKR
Oasis fund's JLH shares might have been distributed to their
investors in specie, leaving them to sell shares in the market,
should they wish to exit for cash. Either of these outcomes would
have been better for all the minority investors.
Enquiries:
John Phelps, Swan Equities Ltd
+44(0)8458-333-832 /+44(0)7855-251215
Alan Richards, West Hill
Corporate Finance Ltd +44(0)20-7464-8821 / +44(0)7899-944320