MFS Limited has made an off-market bid for a 17% stake in hotel management group Tourism, Hotels and Leisure Limited for $37 million and at the same time is set to launch a $500 million tourism investment vehicle.
MFS does not own any shares in TLC and intends to make an off-market bid of 20 cents cash per share for all the remaining shares in TLC. This transaction is conditional upon the 90% acceptance level being achieved in the TLC offer.
MFS’ Tourism’s chief executive Rolf Krecklenberg said TLC’s major assets were complimentary to MFS’ existing suite of accommodation brands operating under the Stella Resorts Group umbrella.
“The addition of TLC’s 15 CBD hotels around Australia to the Stella Resorts Group portfolio will further enhance the diversity of Stella’s product offering,” Krecklenberg said.
TLC operates a network of 15 properties in Australia, with six in Sydney, four in Melbourne, two in Adelaide and one in Brisbane, Canberra and Perth.
TLC also has a significant shareholding in Dutch-based Golden Tulip, which is the 18th largest hotel operator in the world with more than 500 properties spread across 40 countries of which 50 are in the Asia Pacific region.
MFS has also agreed to acquire the freehold, leasehold and management rights associated with certain properties managed by TLC for $26 million. This transaction is also conditional upon the 90% acceptance level being achieved in the TLC offer. MFS intends to fund this acquisition from cash resources and existing debt facilities.
MFS’ managing director Phil Adams said the assets will be integrated into the Stella Resorts Group and add a new dimension to that group by providing an outstanding network of corporate properties in CBD locations to complement MFS’ existing tourism and leisure assets.
“The acquisitions are the next step in an ongoing process to execute MFS’ strategy of creating a separate investment vehicle for the Stella Resorts Group and MFS’ tourism assets,” he added.
Meanwhile, MFS intends to create a tourism focussed investment vehicle with assets valued up to $500 million, which MFS will manage on an ongoing basis.
Adams said the tourism investment vehicle will in place no later than the end of the third quarter of this financial year.
The creation of this vehicle will increase MFS’ assets under fee paying management by at least $400 million and will complete the transformation of MFS into a pure investment and financial services group.
By Kathryn O’Meara
