Prestige Holdings Ltd is the latest of three companies listed on the T&T Stock Exchange to prepare to get rid of money-losing assets in its group of companies. The other two such companies being Guardian Holdings Ltd (GHL) and Neal and Massy Holdings Ltd (N&M). Prestige Holdiings announced yesterday it has entered into April 10, 2012, stock purchase agreement for Prestige’s joint venture partner, Montlac Corporation, for the sale of the 50 per cent of the shareholding and ownership interest in the Kentucky Foods Group Ltd (KFGL) from Prestige.
Prestige is the local franchise holder of KFC, Pizza Hut, Pizza Hut and TGI Friday’s restaurants. The Joseph Esau-chaired local restaurant operator announced its planned exit in the Dominican Republic (DR) market in December, when it also then declared its acquisition of Main Stream Foods Ltd’s 40-chain Subway restaurants in T&T for $110 million. The Subway transaction was financed by an unsecured loan from parent company, Victor E Mouttet Ltd.
Esau, who is also chairman of Agostini’s Ltd, said in successive annual reports that its operations in the DR have been challenging. “Since PHL invested in the 50/50 KFGL joint venture in the DR in 2000, the business has experienced volatility in its performance, starting with the economic crisis in the DR in 2002/2003.
“KFGL currently owns and operates twelve KFC and two TGI Friday’s restaurants. In October 2009, PHL gave up management control to the joint venture board of directors, and KFGL has since suffered frequent management changes and significant losses, requiring substantial working capital support from the joint venture partners. “The directors of PHL have, since ceding management control, been considering a possible exit from this market. The carrying value of this investment is $29.5 million, and we expect a significant impairment of our investment. “Our investment in KFGL is a sunk cost, and while the impact on our P&L in 2011 would likely be significant, PHL is in a healthy debt/equity position to adequately accommodate the eventual write off,” Esau stated last December when it announced the Subway deal.
N&M to sell hotels
Apart from PHL, the T&T-headquartered Neal and Massy Holdings, which owns the Almond hotels in Barbados, stated last year it planned to get rid of the debt-carrying assets. Last week, Ralph Taylor, chief executive officer of Almond Resorts, said Almond Beach Village will close April 30 amidst “the deteriorating quality of the product.” In its 2011 annual report, Neal and Massy chairman Arthur Lok Jack said: “Given the uncertainty of the world economic environment and the significant investments necessary to upgrade the hotels in Barbados and St Lucia, the Group took the decision to substantially dispose of its investments in Almond Resorts Incorporated and its associated hotels.
“The divestment transactions are expected to be completed in the 2012 financial year and would likely result in the Group remaining with an available for sale investment in Almond Resorts Inc, and with a secured loan to that entity,” read the chairman’s official statement. Almonds’ debts are big. Gervase Warner, president and Group chief executive officer, said Almond was faced with debts exceeding US$51 million. Of that figure, US$40.7$80 million is in bad debt and US$12.7 million in related party debt.
GHL mission: Exit Europe
Finally, GHL has been divesting its poorly-performing United Kingdom assets as part of a plan to exit the recession-hit European market for the last two years. Last May, GHL and its partners agreed to dispose of subsidiary Jubilee Group Holdings, a Lloyd’s of London business, as part of an ongoing strategic review of the company’s operations, which will see the company exiting the European market. Jubilee Group was sold to Ryan Specialty Group, a UK-based general underwriting agency specialising in financial products, for £35 million. GHL chairman Lok Jack said its acquisition of Zenith Insurance Company, the Gibraltar-based insurance carriers, which was sold in 2009 resulting in a $856 million write-down. He said the Jubilee Group Holdings, “has provided the group with an excellent return on capital.”