Hamilton hotels share sell-off
Maori business heavyweight Waikato-Tainui is believed to be considering selling a large slice of its Hamilton hotel interests.
The Waikato Times understands the tribe's commercial arm will retain a minority stake in Hamilton Riverview Hotels Limited, owner of the Novotel Tainui Hamilton and the Ibis Hamilton Tainui, after first buying out the current minor shareholder, international hotel management company Accor.
Tainui Group Holdings and Hamilton City Council are this week expected to confirm plans to then jointly offer a majority stake in the hotels, the result of extended informal talks between the three shareholders.
Hamilton ratepayers and TGH between them own almost 83 per cent of the hotels.
The city has been signalling its wish to sell out of the hotels for some time but Waikato corporate juggernaut TGH's decision was not expected.
Earlier this year the council's 41 per cent shareholding was independently valued at $14m.
The organisations are thought to believe that offering a majority stake in their well-performed hotels business will help draw a premium price.
TGH chief executive Mike Pohio declined to comment on the matter.
The tribe's hotel interests also include 70 per cent of the $65m Novotel Auckland Airport through its subsidiary Tainui Development Limited.
The council was briefed behind closed doors on the progress of lengthy confidential shareholder talks over the future of the city's stake in the Ibis and Novotel hotels late last week.
Before that briefing, council performance general manager Blair Bowcott told the Times he would be presenting the council with a "recommended path forward for progressing the sale of [the city's hotels] shareholding".
He indicated that the briefing would not include consideration of any offers to buy, and that the process would be a multiple- stage process.
The pre-emptive rights process in the hotel company constitution requires shareholders to first offer those shares to the other shareholders.
When approached after the briefing Mr Bowcott would say only that the matter remained confidential, so he was restricted in his ability to comment.
However, he expected that "in the next week" the council would be able to make a public statement and update on the sale of its shareholding.
He agreed a larger offering would help draw the best price for the city's shares.
Once any hotels shareholder initiates formal sale discussions with other shareholders a time limit is triggered under the company constitution.
Mr Bowcott has previously confirmed the city's treasury policy is to repay debt with proceeds from asset sales, and spending it elsewhere - such as on a one-off rates reduction or investing in other assets - would require formal public consultation.
The company has performed well in recent years, a year ago reporting high occupancy and a $500,000 dividend while paying down $3.5m on its term loans.
The city announced its initial investment in the four-star Novotel hotel in 1996 after 18 months of secret talks with Waikato-Tainui. It provided $2m worth of land and $4m, the tribe $6m and Accor Asia Pacific $5m in cash and loans.
The hotel had a patchy first operating year after opening in 1999, and Waikato-Tainui and the city were forced to bail it out with a further $1m in 2000.
By 2005, when the company announced plans for the $20m economy Ibis hotel, the city's stake was worth $10m and no injection was needed as the company funded the debt and operating cost.
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