Redcape in $230m pubs deal

Redcape Property Fund is set to sell 20 pubs to the Laundy Hotel Group in a deal worth about $230 million. In a note to investors, the group confirmed that a Goldman Sachs-backed consortium had bought a 39 per cent stake in Redcape Property Fund's senior debt. The executive chairman of Redcape, Colin Henson, said the consortium had said it was interested in a plan to underwrite a recapitalisation of the Redcape group.

The purchase of the debt comes as Redcape investigates the mass sell-off, which could include the Bristol Arms in Sussex Street in the city. It currently leases the hotel to National Leisure & Gaming (NLG), along with the other 19 hotels in the plan. Under it, Redcape is selling the pubs freehold, while NLG is selling the businesses' operating side.

The Laundy deal, which is being backed by the National Australia Bank, indicates the sector is beginning to regain appeal. The Australia and New Zealand Banking Group advised Redcape, while Investec gave guidance to the Laundy group. Mr Henson has said in the past that should the sale go ahead, Redcape would be left with about 50 pubs, most with long-term leases to Wesfarmers. NLG would remain the leasehold owner of its remaining 15 pubs.

Source: Sydney Morning Herald