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Acquisition of Waves Hotel and Spa, Barbados

8 Feb 2016 07:00

RNS Number : 3087O
Elegant Hotels Group PLC
08 February 2016
 

 

 

Elegant Hotels Group plc

 

Acquisition of Waves Hotel and Spa, Barbados

 

Elegant Hotels Group plc ("Elegant Hotels" and, together with its subsidiaries, the "Group"), the owner and operator of five upscale freehold hotels and a beachfront restaurant on the island of Barbados, is pleased to announce that, through its subsidiary Elegant Hotels (Barbados) Management Ltd, it has entered into a conditional agreement to acquire the entire issued share capital of Swiss International Ltd ("Swiss International") in Barbados, the owner of the property trading as Waves Hotel and Spa ("Waves"), for a total consideration of US$18.0 million.

 

Waves is a 4-star, 70-bedroom all-inclusive resort located at Prospect Bay in the parish of St. James in Barbados. It has a prime beachfront location on the popular west coast, or "Platinum Coast", of the island and is close to a number of popular tourist destinations including the areas of Holetown and Bridgetown. The hotel occupies approximately 1.8 acres of freehold land, and its facilities include a restaurant, bar, gym and destination spa with18 treatment-rooms.

 

The agreement to acquire Waves is subject to the completion of a credit agreement with the Group's bankers, The Bank of Nova Scotia, as well as the approval of the Central Bank of Barbados. The conditions are expected to be completed before the end of February 2016.

 

US$5.46 million of the consideration will be paid to Swiss International's holding company, Beach Holdings SA in cash, and Elegant Hotels will assume Swiss International's existing debt of US$12.19 million. A further US$0.35 million will be paid to Paynes Bay Ltd ("Paynes Bay") for the business and fixed assets of Waves. Paynes Bay is owned by the current shareholders of Beach Holdings SA and carries out the day-to-day operations of Waves.

 

Following the completion of the transaction, in order to fulfil existing customer bookings, the property and business will be leased back to Paynes Bay until 15 April 2016 when the business will revert to Swiss International, together with the employment contracts of the staff engaged in the operation of the hotel. Shortly after that date the property will be closed for renovation. The hotel will be refurbished, repositioned and ultimately repriced before being rebranded as 'Waves by Elegant Hotels', and it is expected to re-open for business in the middle of July 2016.

 

The expected cost of the renovation and other expenditure related to the transaction is US$4.0 million. The total acquisition and renovation costs of US$22.0 million will be funded through additional credit facilities of US$18.5 million as an extension to the Group's existing credit agreement with The Bank of Nova Scotia, an interest-free vendor loan of US$2.0 million repayable over four years, and US$1.5 million of the Group's existing cash resources.

 

For the year ended 30 June 2015, the combined revenue and EBITDA of Beach Holdings SA (which includes all of the operating income and costs of Waves recharged by Paynes Bay) and Swiss International were reported as US$6.4 million and US$3.1 million respectively. However, having thoroughly evaluated the operating conditions of the hotel, which in recent years has been run with short-term objectives, in particular under-investing in ongoing repairs and maintenance and operating with limited senior management resources, the Directors of Elegant Hotels believe that the adjusted underlying EBITDA for the period would, if the above factors were taken into consideration, equate to approximately US$2.1 million.

 

The Directors expect this transaction to be earnings enhancing for the Group for the year ending 30 September 2017.

 

Commenting on the news, Sunil Chatrani, CEO of Elegant Hotels, said:

 

"We are delighted to be acquiring such an attractive asset in one of the most desirable locations in Barbados. We see enormous potential for Waves, and are excited about the prospect of creating a family-friendly resort that will complement our existing portfolio and meet the exacting standards that our guests have come to expect from Elegant Hotels.

 

"As we said at the time of our IPO last year, acquiring new assets both in Barbados and the wider Caribbean is a key part of our long-term growth strategy, and we continue to target a number of other opportunities of this kind."

 

 

For further information:

Elegant Hotels Group plc

+1 246 432 6500

Sunil Chatrani, Chief Executive Officer

 

Zeus Capital Limited (NOMAD and Broker)

+44 (0) 203 829 5000

Dan Bate / Nicholas HowAdam Pollock / John Goold

Powerscourt

Rob Greening / Lisa Kavanagh

Email: eleganthotels@powerscourt-group.com

+44 (0) 207 250 1446

 

 

NOTES TO EDITORS:

Elegant Hotels owns and operates five luxury hotels and a beachfront restaurant, Daphne's, on the island of Barbados. The Group's portfolio comprises 483 rooms, which represents almost 25% of Barbados' quality leisure tourist room stock. Four of the five Group hotels are situated along the prestigious west coast of Barbados commonly known as the "Platinum Coast". The properties are all freehold, with a total aggregate plot size of approximately 20 acres and an aggregate beachfront of 2,300 feet. The value attributed to Elegant's portfolio as at 15 April 2015 was $235.5 million.

The Group has a strong market presence and is a profitable, cash generative and financially stable business that has enjoyed continuous growth in both revenue and EBITDA over the last three financial years. In the year to 30 September 2015, it achieved revenues of $60.1million and EBITDA before non-recurring items of $22.2 million.

The Group's shares were admitted to trading on the London Stock Exchange's AIM in May 2015. Its objective now is to leverage its position as a leading hotel operator in Barbados and to expand both on Barbados and further into the Caribbean.

Together, the Group's five hotels - Colony Club, Tamarind, The House, Crystal Cove, and Turtle Beach - offer styles encompassing classic and contemporary, family-friendly and adults-only offerings.

Investor website: http://www.eleganthotelsgroup.com/

Commercial website: http://www.eleganthotels.com/

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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