8th Feb 2016 09:03
LONDON (Alliance News) - Elegant Hotels Group PLC on Monday said it has conditionally agreed to purchase the owner of the Waves Hotel & Spa in Barbados for USD18.0 million, and said it will spend a further USD4.0 million on revamping the site.
Elegant Hotels, through its subsidiary, has agreed to acquire Swiss International Ltd, which owns the four-star, 70-bedroom all-inclusive resort at Prospect Bay in the parish of St James. The 1.8 acre site includes facilities such as a restaurant, bar, gym and destination spa with 18 treatment rooms.
The deal is conditional on Elegant Hotels striking a credit agreement with its lender, The Bank of Nova Scotia, and on approval from the Central Bank of Barbados. Elegant Hotels is expecting those conditions to be met before the end of this month.
Of the total consideration, USD5.4 million will be paid to the holding company of Swiss International, Beach Holdings SA, in cash. Elegant Hotels will then assume Swiss International's existing debt of USD12.2 million. The remaining USD350,000 will be paid to a company owned by Beach Holdings which owns some fixed assets at the site and currently operates the hotel, Paynes Bay Ltd.
Once the deal is completed, Elegant Hotels will lease the site back to Paynes Bay until April 2015, to ensure Paynes Bay can satisfy existing orders. After that date, Elegant Hotels will assume control through Swiss International and temporary shut the site for renovation. It plans to keep the existing staff in preparation to re-open the site in July 2016, rebranded as "Waves by Elegant Hotels."
Elegant Hotels plans to spend USD4.0 million on renovating the hotel, meaning the total acquisition cost will be around USD22.0 million, which Elegant Hotels plans to fund through additional credit facilities of USD18.5 million and from a vendor loan of USD2.0 million, plus USD1.5 million of existing cash resources.
Elegant Hotels expects the operation to contribute to earnings in the financial year to end September 30, 2017.
Elegant Hotel shares were down 1.4% to 109.00 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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