Sunday, October 16, 2011

Occupy the Barron River Hotel?

If corporate greed, financial  stress, and Wall St investment bankers is the target of the Occupy Movement then the ongoing saga of Redcape (ex-Hedley pub fund) may provide the most appropriate local target. Bryan Frith has done his usual thorough job of updating the most recent maneuvres as Goldman Sachs, the evil Wall St death star, continues to orbit Redcape.
The consortium's latest tactic was to force hotel and gaming operator National Leisure & Gaming (NLG) into receivership.
NLG is the lessee of Redcape's NSW pubs and its debt has been recently acquired by Goldman. The Hedley receivers also continue to hold a 19.9% stake in NLG. The NLG receivership apparently creates a default event for Redcape with some potentially punishing consequences for the interest rates on its debt. Goldman has also taken a 40% stake in Redcape's senior debt facility, reportedly at 80c in the dollar.

From the latest report by Frith, it looks like the best offer investors may be able to get will be 10c per security. There was substantial local investment in the float back in 2007, including subsequently unemployed Hedley staff via an employee allocation, at $3.50 per security. Some prominent local business identities have also stayed on board for the ride all the way down.

The latest annual report has some interesting moves among the top 20 security holders, including the appearance of 'Thomas Hedley' with 1,057,163 securities (0.65%). I'm guessing that would be Tom Jnr? Greenacres Holdings has increased its stake during the year and now holds 5,633,246 securities (3.47%).A search shows Greenacres is associated with Bruce McDonald, who is understood to be a business partner of Tom Hedley Jnr. Greenacres has previously had a business address at the Hedley Aumuller St office. Hedley's partner Jeannine Cooke has maintained her 3.13% stake.

Ex Hedley CFO Stephen Donnelly has been active in the last year with his super fund disappearing from the top 20 and his Trust selling down. However, NLT (QLD) Pty Ltd now appears in the top 20 with the same address as Donnelly, and the same number of securities as offloaded by the other two entities. Mr David Row also makes an appearance in the top 20 with 820,000 securities (0.5%), who I believe is the former Hedley Group development manager.

David and Jean Barry of Westco Motors have maintained their 0.62% stake. Redcape director and local business identity Greg Kern has maintained his interest, although he has previously dumped this into the Kern Consulting Group super fund, which I am sure has delighted the fund members. Hedley's receivers remain stuck with their 58% stake. Meanwhile, the comparable ALE pub fund recovered from the GFC hit and is travelling soundly, trading profitably, and providing ongoing income distributions to investors.

The most curious new entrant is Lift Capital Nominees with  0.66%? Lift was a margin lender which collapsed around the some time as the Tricom Opes Prime debacle (which also involved Hedley).

Corporate collapses and unemployed staff, unpaid creditors, financial engineering and huge debts, greed, evil Wall St bankers, corporate intrigue, skinned investors, all closely connected to, and spawned in, the Far North. Redcape also maintains a substantial portfolio of pubs and bottle shops in the Far North. It seems to have all the ingredients to be a local focus for the agenda of the Occupy Movement?

Consequently, KS is contemplating occupancy of the front deck at Redcape's Barron River Hotel as his contribution to the protest. A Sunday session perhaps?

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