Pub investors baulk at AG&E float
Investors rejected the discounted opportunity to own shares in gaming-focused pub group Australian Gaming and Entertainment (AG&E), leading to the collapse of an initial public offering that was six months in planning.
Despite an initial equity offering with an eight per cent yield, the AG&E float fell over on Friday after the market failed to take up the offer on an initial share price of $1, or the subsequent discounted offerings.
Speaking to TheShout, John Musca of Jones Lang LaSalle Hotels – who according to the prospectus would have held two million shares in the company, had the float succeeded – expressed surprise that the offer did not get over the line.
“There was robust enough interest [in AG&E] to suggest there will be further consolidation in that [gaming-centric] asset class,” said Musca.
“Nobody can believe the joint lead managers have no answers… people don’t speculate for six months without expecting a result – but there are plenty of other forces working against it.”
The five venues stipulated for the initial portfolio of AG&E were shown to have strong gaming revenue streams, although there were some questions over the incumbent debt of the Wiley Park Hotel, which is currently in legal proceedings with the Australian Tax Office.
TheShout contacted vendor Les Young, who stipulated he was in a binding contract with the proposed management of AG&E and unable to comment.
The failed float offering has left a number of parties asking questions, with Sean Gallagher of Tudhope Lawyers reportedly up to $300,000 out of pocket. Gallagher did not return a request to speak about the matter.
Questions remain about exactly why the relatively low-shooting IPO did not succeed in this low-debt environment with serious investor hunger for stable returns.
Aside from the Wiley Park, the remaining four properties listed for purchase by AG&E – if and when the $80 million required for the initial capital was raised – came from Lewis Hotel Group.
These are believed to be now back on the market – with one publican investor already suggesting to TheShout that he may again be interested in one of them, after being previously told it had “already been sold” to AG&E.
Source: The Shout - 12 May 2014
