Queens Moat Houses, the hotels group headed by John Bairstow, is calling on its shareholders for a cash injection of £83.1m by way of a rights issue at 83p a share. The terms are one new ordinary share for every three held and 20 for every 33 of the convertible preference stock. The cash is to provide part of the cash consideration of £148m for 24 hotels on the Continent, which will take the Queens Moat chain to 116 hotels — 42 in Europe and 74 in Britain.
The group’s first Continental hotel was bought only last November and its expansion there has been nothing less than meteoric. The latest cash call and expansion moves come along with record half-year results, which are complete with a £41m surplus on a property revaluation.
The hotels being acquired include seven city-centre and airport hotels and one provincial hotel in Germany, all of which are currently managed by Holiday Inns. They are being bought for a total of £73.8m from the Globana Group, of Germany. The remaining 16 hotels are owned by Crest Hotels and are located in major towns in Belgium, Holland and West Germany: the consideration for these is £73.75m.
Queens Moat has turned in half-time pre-tax profits of £9.06m against £6.26m in the previous first half. Earnings per share come out at 2.38p against 1.90p and the interim dividend is being lifted from 0.75p to 0.9p, and a similar final payment is forecast.
The latest acquisitions fit into the group’s policy of concentrating on the conference and business traveller market. The cost per room works out at less than £50,000, which is well below other recent deals for similar types of hotel.
Mr Bairstow says that the directors intend to avoid currency risks by matching the company’s continental assets with borrowings in local currencies.
The deal means that net assets per share after the acquisitions and the rights issue will be around 90p.
Holiday Inns, which has been managing the Globana chain, will enter into an agreement on seven of them and these hotels will still trade under the Holiday Inns banner and, while being managed by Queens Moat, will participate in the Holiday Inns reservations and marketing system.
