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Perth pub owner collapses under mountain of debt
STUART McKINNON, The West Australian, March 22, 2011, 10:52 am
Embattled Perth pub owner Compass Hotel Group has collapsed under more than $100 million in debt.
The listed company, which operates a portfolio of 12 licensed premises in WA including the Albion Hotel, the Carine Glades Tavern, the Greenwood Hotel and the Herdsman Lake Tavern, will continue to operate in the short term.
Receiver Taylor Woodings said the company's premises remained high quality assets and would continue to operate despite its appointment.
"The group's employees, including staff working at the hotels and bottle shops will not be impacted by the appointment of receivers," the company said.
Quentin Olde, of Taylor Woodings, said receivers would assess the group's financial position, its assets and investigate opportunities for their sale.
"We will maintain communication with key stakeholders, including employees, throughout this process and provide more detail to these stakeholders as it becomes available," he said.
Compass had been in breach of its loan covenants with St George since June 2008 after buying a slew of Perth pubs at the height of the market.
Late last year, Compass said difficult trading conditions were making it difficult for it to service its debt.
Last month, the company posted a $3.4 million first-half loss and wrote down the value of its portfolio by a further $5.1 million.
The group has blamed a host of factors for its woes, from the global financial crisis to aggressive competition from cut-price liquor chains.
More recently it pointed to a migration of patrons to "newer and more modern establishments", adding that its pubs were in need of "extensive refurbishments" for which it couldn't afford to pay.
Other Compass pubs include the Belmont Tavern, Brighton Hotel, Gosnells Hotel, Kalamunda Hotel, Lakers Tavern, Peel Alehouse, Peninsula Tavern and Princess Road Tavern.
Compass shares, which have been suspended, last changed hands for 1.5 cents, giving it a market capitalisation of about $2 million.
Compass points to Perth pub sales
Russell Quinn, Business Reporter From: PerthNow March 22, 2011 11:33AM
RECEIVERS appointed to the Compass Hotel Group, which owns and operates 12 pubs across Perth, have received early interest from parties keen to purchase the venues.
Quentin Olde, Ian Francis and Michael Ryan of Taylor Woodings have been appointed receivers and managers of Compass and its 100 per cent owned operating subsidiaries, and Primary Compass as the responsible entity of Compass Hotel Group Trust.
“As Receivers, we will now assess the financial position of the Group and its assets, and will investigate opportunities for their sale in the future,” Mr Olde said.
A spokesperson for Taylor Woodings confirmed with PerthNow that there had already been a number of parties that had registered their interest in purchasing the assets.
While the receivers would not be drawn on where the interest was coming from it is understood that Woolworths' Australian Leisure & Hospitality Group, which already owns 288 pubs and clubs nationwide, would be one of the parties to throw their hat in the ring.
The spokesperson indicated that the sale of the venues was very likely, and that the receivers were investigating all potential options for sale including splitting or grouping the assets together for possible acquisition.
The appointment of receivers follows last month's reporting of a first-half net loss of $3.38 million, a turnaround from the previous year’s net profit of $1.77 million.
The loss, Compass said, included an impairment cost of $5.1 million, due to lower valuations on its properties during 2010 when the Perth market declined, and fair value profit on financial instruments of $3.3 million.
At the time Compass said that it was in talks with its bank St George to reduce its “high” debt to a more sustainable level. St George is currently owed in excess of $100 million.
And the company indicated it would embark on a refurbishment program to counter competition from the increasing number of pubs and bars across Perth.
The publicly-listed Compass owns and operates 12 of Perth’s favourite watering holes including the Greenwood Hotel, Princess Road Tavern, Carine Glades Tavern, Peninsula Tavern and Herdsman Lake Tavern in the northern suburbs.
As well as the Gosnells Hotel, Belmont Tavern, Lakers Tavern, Brighton Hotel and Peel Alehouse to the south, the Kalamunda Hotel in the Perth hills and Cottesloe’s Albion Hotel.
“The Group’s hotels and bottle shops will continue to operate on a ‘business-as-usual’ basis,” Mr Olde said.
“Individually, they are high quality assets and operationally remain unaffected by our appointment."
He said the company’s employees, including staff working at the hotels and bottle shops, will not be impacted by the appointment of Taylor Woodings.
“We will maintain communication with key stakeholders, including employees, throughout this process and will provide more detail to these stakeholders as it becomes available," he said.
Pubs as listed on Company website:
Kalamunda Hotel, Kalamunda
Carine Glades Tavern, Duncraig
Princess Rd Tavern, Balga
Peninsula Tavern, Maylands
Brighton Hotel, Mandurah
Peel Alehouse, Halls Head
Belmont Tavern, Cloverdale
Herdsman Lake Tavern, Wembley
Albion Hotel, Cottesloe
Gosnells Hotel, Gosnells
Greenwood Hotel, Greenwood
Lakers Tavern, Thornlie
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