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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Jap. Leisure H. | LSE:JPLH | London | Ordinary Share | GG00B28QMS50 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 23.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMJPLH
RNS Number : 6117F
Japan Leisure Hotels Ltd
28 April 2011
28 April 2011
Japan Leisure Hotels Limited
("JPLH" or the "Company")
Proposed Disposal
Proposed Cancellation of Admission to Trading on AIM
SUMMARY
-- Proposed disposal of all of the Company's trading subsidiaries to Sanglier Pte (the "Buyer").
-- Total consideration, before expenses, of Yen 1.42 billion (approximately GBP10.4 million).
-- Net proceeds to be returned to shareholders as soon as practicable.
-- All proposals subject to approval by shareholders at an Extraordinary General Meeting.
Alan Clifton, Chairman of Japan Leisure Hotels, commented:
"We have made every effort to achieve our aim of creating sufficient scale in the Japanese leisure hotel industry to become a market leader. Unfortunately this has not proved possible, despite many avenues having been explored. The Company is therefore not fulfilling the full potential envisaged at the time of its admission to AIM.
"The Board has considerable misgivings about the price to be paid for the trading subsidiaries, especially in view of its underlying value as a going concern. However, DKR Oasis has agreed this transaction and, given their control over 87.57% of the Company, the required resolutions will almost certainly be passed.
"Finally, I would like to pay tribute to New Perspective, whose team has worked tirelessly as the Company's Asset Manager in implementing the business plan. It is disappointing that their efforts have not been rewarded in the way we would have anticipated, but they deserve credit for running the hotels very professionally in the face of some very challenging trading conditions."
Enquiries:
Japan Leisure Hotels Limited Janine Lewis, Non-Executive Director 01481 737600 Shore Capital and Corporate Limited (NOMAD to the Company) Dru Danford Stephane Auton 020 7408 4090 Pelham Bell Pottinger 020 7861 3112 or 07802 442 Archie Berens 486
Japan Leisure Hotels Limited
("JPLH" or the "Company")
Proposed Disposal
Proposed Cancellation of Admission to Trading on AIM
Background
On 20 December 2010, the Company announced that DKR Oasis had informed the Board that it wished to exit its investment in the Company and was taking active steps to achieve this end. As noted in that announcement, there are a number of ways such an exit could be structured including an offer being made for the Company's shares or the sale of the Company's assets.
Since the date of that announcement, DKR Oasis has had discussions with over 20 potential buyers regarding the sale of the Company's shares or assets. The Company has co-operated with this process by enabling potential interested parties to conduct due diligence into the Company's assets with the intention of maximising proceeds to Shareholders.
The Company has also considered other possible transaction structures which might deliver value to Shareholders such as seeking bank finance secured over the Company's assets to enable a buy-back of the share capital held by DKR Oasis, or a placing of the share capital held by DKR Oasis on AIM. However, discussions which have been held in relation to such transaction structures have not, in the Board's opinion, suggested that any of such alternative transaction structures would prove successful.
Recently, DKR Oasis informed the Board that it had reached agreement in principal with the Buyer on a proposal for the acquisition of the JLH Subsidiaries. Clearly this Disposal could not take place without the cooperation of the Company. Whilst the Board has considerable misgivings about the proposed Disposal given that the consideration being offered is significantly lower than the value of the Bonita Hotels on a going concern basis, as referenced in the Company's Interim Results for the 6 months ended 30 June 2010 announced on 28 September 2010, it is mindful of the fact that DKR Oasis has control over 87.57% of the Ordinary Shares and is in a position, should it choose, to change the Board and cause the Company to enter into the Disposal anyway. Given this situation, the Board considers it would be in Shareholders' best interests to work cooperatively with DKR Oasis to enable the Disposal to take place in an orderly fashion rather than incur the substantial costs which would result if the Board engaged in a drawn-out process of resisting DKR Oasis. Such a process would only delay the inevitable and incur advisory and other costs which would simply reduce the amount available to be distributed to Shareholders
Finally, the Board is mindful of the fact that the Company has not reached the desired scale and so is not fulfilling the full potential envisaged when it was admitted to AIM. As Shareholders are aware, the AIM admission proceeded notwithstanding the low amount of money raised at the time of the initial public offering since, in the Board's view, the substantial amount of work carried out meant that the Company could obtain the admission of its shares to AIM and when market sentiment improved, implement a secondary offering to expand its business. Unfortunately, this has not proved possible.
Details of the Disposal
Pursuant to the Sale Agreement between the Company, DKR Oasis and the Buyer, the Buyer has agreed to acquire all of the issued shares of the JLH Subsidiaries for a cash consideration of 1.42 billion Yen (approximately GBP10.4 million), with 50 million Yen having been paid to the Company as a cash deposit upon signing of the Sale Agreement and the balance to be satisfied in cash upon Completion. As at 30 June 2010, the net asset value of JLH was 5.0 billion Yen and the EBITDA attributable to the six hotels the subject of the sale amounted to 122.0 million Yen for the six months ended 30 June 2010 (12 months ended 31 December 2009 was 332.6 million Yen). The Directors will use the net proceeds raised from the Disposal to return cash to Shareholders and it is expected that the minimum payment will be approximately 22 pence per share.
In conjunction with the SPA, the Company, DKR Oasis, the Buyer and the Beneficiary have also entered into the Warranty Deed, pursuant to which the Company and DRK Oasis have provided certain warranties in favour of the Company and DKR Oasis in connection with the Disposal.
The Beneficiary has entered into sale agreements with the TK Owners pursuant to which the Beneficiary will acquire all of the issued shares of the TK Operators from the TK Owners.
As part of the arrangements for the Disposal, the Asset Manager and the Hotel Operator have also agreed to terminate the asset management agreements and the hotel operating agreements that they have respectively entered into with each of the TK Operators regarding the management and operation of the Bonita Hotels, effective upon completion of the Disposal. Bonita Services LLP, the company that employs the staff who work in the Hotels, will terminate the employment of all employees effective upon completion of the Disposal, and cooperate with the Buyer to assist the Buyer to rehire all such employees. DKR Oasis has agreed to meet the costs of such termination of agreements in order to facilitate the Disposal.
In this way, full ownership of the Bonita Hotels and the business of operating them will be transferred to the Buyer upon completion of the Disposal.
Under the terms of the Sale Agreement and pursuant to the AIM Rules, the Disposal is conditional, inter alia, upon the approval of Shareholders at the EGM. DKR Oasis has entered into an irrevocable undertaking under the Sale Agreement to vote in favour of the resolution to approve the Disposal, and accordingly it is extremely unlikely that this condition will not be satisfied.
Prospects
It is disappointing for everyone that the opportunity outlined in the Admission Document three years ago remains unexploited in the Japanese leisure hotel industry. Notwithstanding the challenges of the Japanese economy, changes in regulation, a global financial crisis, earthquake and tsunami the portfolio of Bonita Hotels has continued to generate good cash flows and the Asset Manager has continued to develop the business plan on a consistent and thoughtful basis.
In looking to the future of the Bonita Hotels it has to be taken in the context of the market and as we have consistently noted, in a market of 25,000 hotels 90% of owners have 5 or fewer hotels. The group of Bonita Hotels comprises only 6 hotels so in the current configuration is far from a market leader. In this environment the aim of the business plan had been to expand and drive efficiencies of scale, but with a lack of capital it is not possible to pursue this strategy. Without the ability to expand it becomes necessary to review the strategy and it becomes evident with a modicum of analysis that the current business is not large enough to support the central overheads.
Proposed Cancellation of Admission to Trading on AIM
Upon completion of the Disposal, the entire business of owning and operating the Bonita Hotels will be transferred from the Company to the Buyer and the Beneficiary. The JLH Subsidiaries which invested in the Bonita Hotels, are currently the only assets of the Company, and accordingly the Disposal will effectively result in a fundamental change of business for the Company as it will no longer have any investments in Japanese leisure hotels, ancillary businesses directly related to the operation of leisure hotels or securities secured on Japanese leisure hotels. The Directors will therefore be seeking Shareholder approval at an Extraordinary General Meeting for the cancellation of admission of the Ordinary Shares to trading on AIM, the winding up of the company and the return of capital to shareholders. A circular containing a notice of an Extraordinary General Meeting will be posted to shareholders as soon as practicable.
DEFINITIONS
The following definitions apply throughout this announcement unless the context requires otherwise.
"AIM Rules" the rules for AIM companies and their nominated advisers issued by the London Stock Exchange "AIM" AIM, a market of the London Stock Exchange "Asset Manager" New Perspective YK, a Japanese company which provides asset management services to the TK Operators "Beneficiary" AM1 Co., Ltd "Bonita Hotels" the hotels owned by the TK Operators in Isawa, Komaki, Matsusaka, Sendai, Yamagata and Yokkaichi, Japan "Buyer" Sanglier Pte. Ltd. "Completion" completion of the Disposal pursuant to the Sale Agreement "Directors" or "Board" the directors of JLH whose names are set out on page 4 of this document "Disposal" the proposed disposal of all of the issued and outstanding shares of the JLH Subsidiaries to the Buyer as described in this document "DKR Oasis" Chestnut Fund Ltd and Japan Resorts and Leisure Limited. "Extraordinary General the extraordinary general meeting of the Meeting" or "EGM" Company to be convened "Form of Proxy" the form of proxy for use at the EGM, enclosed with this document "Group" the Company and its subsidiaries "Hotel Operator" Bonita Services LLP, a Japanese company which provides hotel operation services to the TK Operators "Japan Leisure Hotels", Japan Leisure Hotels Limited, a Guernsey "JLH" or the "Company" incorporated company with registered number 47899 "JLH Subsidiaries" JLH1 and JLH2 "JLH1" JLH1 Limited, a Guernsey incorporated company with registered number 47918 "JLH2" JLH2 Limited, a Guernsey incorporated company with registered number 47919 "London Stock Exchange" London Stock Exchange plc "Notice" the Notice of the Extraordinary General Meeting as set out herein "Official List" the Official List of the UK Listing Authority "Ordinary Shares" the ordinary shares of 1 pence each in the capital of the Company "Pounds" or "GBP" the lawful currency of the United Kingdom "TK Operators" First Dormitory Yugen Kaisha, Yugen Kaisha KN Planning, Yugen Kaisha Chubu Kasseika and BLT Godo Kaisha, Japanese companies which have received capital contributions from the JLH Subsidiaries in order to acquire the Bonita Hotels "TK Owners" Bonita Holdings LLC and Bonita Holdings Ltd, the shareholders of the TK Operators "Sale Agreement" the agreement between the Company, DKR Oasis, and the Buyer and the Beneficiary relating to the disposal of the JLH Subsidiaries and the TK Operators "Shareholders" holders of Ordinary Shares "UK Listing Authority" the Financial Services Authority in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Market Act 2000 "UK" the United Kingdom of Great Britain and Northern Ireland "Warranty Deed" the warranty deed between the Company, DKR Oasis, the Buyer and the Beneficiary relating to the disposal of the JLH Subsidiaries and the TK Operators "Yen" or "Yen" the lawful currency of Japan
This information is provided by RNS
The company news service from the London Stock Exchange
END
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