Stakis in pounds 67m call to fund acquisitions
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Your support makes all the difference.STAKIS, the hotels and casinos group, is calling on shareholders for pounds 67m to fund an acquisition spree.
David Michels, the chief executive, said he wanted the money to take advantage of the depressed UK market prices for hotels.
Stakis accompanied news of the cash call with plans to purchase two hotels. It is buying the Coburg Hotel in Bayswater, London for pounds 9.5m and the Airport Ambassador Hotel in Norwich for pounds 6m.
The Coburg Hotel is to be bought from receivership. Resort Hotels, the stricken leisure group currently subject to an investigation by the Serious Fraud Office, formerly handled the management contract.
After the rights group gearing will reduce from 45 per cent to 20 per cent. Mr Michels said the group would increase gearing back up to 45 per cent if it saw suitable opportunities.
Stakis has restructured its banking arrangements as well. It has raised its borrowing facility to pounds 170m from pounds 130m while slimming the number of backing banks from nine to four.
And at the same time as strengthening its balance shet with the rights issue and debt reorganisation Stakis promised to pay shareholders a 1.5p dividend for 1994. It paid 1p in 1993.
The one-for-four rights issue is pitched at 72p. Shares in the market fell 1p to 84p. A 1.5p dividend equates to a gross yield of 2.2 per cent.
Mr Michels also reaffirmed Stakis' commitment to running casinos. Its 21- strong chain of licences was put up for sale as the company was fighting for survival. He said: 'Stakis has a clear current acquisition policy. Hotels must generally be in the UK, in prime locations, larger than 100 bedrooms and of good three or four-star standard offering scope to generate a higer return.' The Coburg and Ambassador fit this profile.
Mr Michels added: 'A number of attractive hotels and a small number of casinos which meet the group's requirements as to quality and price are currently available. The directors believe that it is now appropriate to raise new equity to take advantage of these opportunities as the UK economy emerges from the recession and before prices reflect recovery.'
Despite Mr Michel's optimism about opportunites for asset acquisitions and a resurgent UK economy the company's current trading experience is less favourable.
Bottom Line, page 40
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