HISTORY REPEATS AS MANTRA BUYS OUTRIGGER

Written on the 19 March 2015 by Nick Nichols

HISTORY REPEATS AS MANTRA BUYS OUTRIGGER

MANTRA Group (ASX:MTR) has taken advantage of a rising share price by asking investors for $50 million to help fund its acquisition of Outrigger Hotels & Resorts Australia.

The buyout, pitched at $29.5 million, will add four resorts to Mantra's portfolio, two of them on the Gold Coast.

It also marks what effectively is a second buyout of the Outrigger brand in the past eight years, with the first led by former funds manager MFS, the failed Gold Coast company that laid the foundations for Mantra Group a decade ago.

Under the latest agreement, Mantra will acquire Outrigger Surfers Paradise, Outrigger Twin Towns Resorts at Coolangatta, Outrigger Little Hastings Street Resort & Spa at Noosa and Boathouse Apartments by Outrigger at Airlie Beach.

The deal, expected to be completed by June, will add 984 rooms to the group's existing portfolio of 11,700 rooms. It also is expected to be earnings accretive in 2016, says Mantra CEO Bob East.

"The Outrigger acquisition is a natural fit for Mantra Group, extending the group's footprint in key leisure destinations," East says.

"This acquisition is complementary to our existing portfolio and, together with future pipeline growth initiatives, is expected to supplement Mantra Group's strong organic growth with incremental earnings.

"We look forward to working with the owners, guests and team members to make the transition as smooth as possible."

The Outrigger buyout is a case of "de javu" for Mantra, which was founded through a series of acquisitions by former owner MFS a decade ago. In 2006, the Hawaii-based Outrigger sold its entire Australian and New Zealand portfolio of 19 properties to Mantra, then known as Stella Group, for $91 million.

Outrigger made a tentative return to Australian in 2008 with the acquisition of the Twin Towns resort and later the former Holiday Inn Surfers Paradise, which were rebranded.

Outrigger says the latest sale agreement does not mean the group is planning to exit the Australian market.

"Outrigger will continue to seek out properties along the vast Australian coastline that fit the new Outrigger Resort brand standards," says a company spokesman.

"We are not leaving Australia or selling or franchising our brand. As part of the agreement, with the exception of a few strategic personnel who will remain with Outrigger, all Outrigger employees at the OHRA office and affected properties will be retained by Mantra."

The spokesman says the sale is similar to the 2006 deal in that "Australia remains an important global market for us and we continue to actively search for brand-aligned opportunities in the country".

Meanwhile, to fund the buyout, Mantra has launched a fully underwritten institutional placement of 16.4 million shares to raise about $50 million, or $3.05 per share. The final price will be determined by a bookbuild process to be completed today.

The $3.05 placement price compares with Mantra's last traded price of $3.24, which has risen strongly from its $1.80 issue price in June last year.

Mantra's shares have been placed in a trading halt pending the capital raising, but are expected to resume trading tomorrow.

A separate share purchase plan will accompany the capital raising and will entitle existing shareholders to subscribe for up to $15,000 worth of Mantra shares at a price at least as low as the institutional placement.

The share purchase will not be underwritten and Mantra gives no indication of how much it is expected to raise, although it is not expected to me material.

Mantra says all surplus funds following the Outrigger acquisition, expected to be about $18.4 million, will be kept in reserve for further growth opportunities.

The company, which reported a solid interim profit of $21.7 million in the December half, says business has been trading ahead of expectations in January and February this year.


Author: Nick Nichols

Latest News

CROWN EMPLOYEES CONVICTED, JASON O'CONNOR TO SPEND 10 MONTHS IN JAIL

CROWN Resorts (ASX: CWN) employees who were arrested in October last year on suspicion of gambling offences have b...

QUICK TURNAROUND FOR $20 MILLION OFFICE IN MELBOURNE OUTER-EAST

AN office building in Melbourne's outer eastern suburb of Mount Waverley has sold for $20.5 million just two year...

METCASH NET PROFIT FALLS 20 PER CENT, ANNOUNCES CEO WILL STEP DOWN IN 2018

FOOD and grocery giant Metcash has announced its full year net profit has fallen more than 20 per cent and its CEO Ia...

SHARE PRICE PLUNGE FOR RETIREMENT VILLAGE OPERATOR AHEAD OF FOUR CORNERS INVESTIGATION

A RETIREMENT village operator which has been accused of charging excessive fees through complex contracts has respond...

Related News

METCASH NET PROFIT FALLS 20 PER CENT, ANNOUNCES CEO WILL STEP DOWN IN 2018

FOOD and grocery giant Metcash has announced its full year net profit has fallen more than 20 per cent and its CEO Ia...

SHARE PRICE PLUNGE FOR RETIREMENT VILLAGE OPERATOR AHEAD OF FOUR CORNERS INVESTIGATION

A RETIREMENT village operator which has been accused of charging excessive fees through complex contracts has respond...

CHINESE TECH FIRM LOOKS TO AUSTRALIA FOR 'CUTTING EDGE' IDEAS

CHINESE ed-tech company Retech Technologies (ASX: RTE) has listed on the ASX after raising $17.9 million from its IPO...

COLLINS FOODS GOBBLES UP MORE AUSSIE KFC STORES

COLLINS Foods Limited (ASX: CKF) has purchased 28 KFC restaurants from Yum! Brands Inc for $110.2 million, adding fur...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter