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Australian hotel and pub operator Redcape Hotel Group (ASX: RDC) has today announced plans to delist from the Australian Securities Exchange (ASX:), citing a lack of support from institutional and retail investors in the listed market as the company’s main reason to leave.
The announcement comes as Redcape today reported net profit after tax for FY21 of $28.5 million - more than double what it recorded last year.
The group’s proposed delisting comes less than three years since Redcape made its debut on the ASX (ASX: ASX), but the company says since its IPO it has “consistently traded at a discount to Directors NAV (net asset value)”.
“Despite strong underlying performance, Redcape has faced and continues to face significant headwinds in obtaining broader institutional and retail investor support in the listed market,” says Redcape.
“As a result of this, the Independent Board Committee believes that the Proposal is the most attractive pathway to achieve better liquidity alternatives at pricing which more closely align to the underlying value of Redcape’s portfolio and Directors NAV.”
As such, Redcape has called a general meeting of shareholders to be held at 11am on Friday, 10 September 2021 where investors can vote on the company’s proposed delisting plan.
“The Proposal would provide optionality for security holders to either remain invested in an open-ended unlisted found with a high-quality underlying asset base ore realise their investment at $1.15 per Redcape Security, a significant premium to the current trading price, under a Buy-Back which would be conducted prior to delisting,” says Redcape.
Shares in Redcape closed at $1.12 per share on Friday 20 August.
The company, which owns 36 venues around Australia, today reported a 51.7 per cent rise in underlying earnings for the FY21 period to $65.4 million, driven by revenue growth from its community pubs.
Redcape says it is not providing guidance for FY22 considering the impact of COVID-19 on trading.
However, it expects a weekly underlying earnings loss of around $800,000 and a weekly operating cash outflow of between $1-1.2 million whilst in lockdown.
“Owning the vast majority of its assets, Redcape has the financial and operational flexibility to withstand an extended lockdown and provide the appropriate levels of support to staff,” says Redcape.
“It had approximately $100 million in cash and available debt as at 30 June 2021 while retaining strong support from its financing partners.”
Shares in Redcape are down 0.45 per cent to $1.12 per share at 10.28am AEST.
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