Founders In Plan To Rescue Casino
Sydney Morning Herald
Tuesday April 29, 1997
Malaysian group Metroplex has joined the Australian Tourism Group and Touraust Corp to offer a rescue package to Reef Casino Trust, owner of the troubled Reef casino in Cairns, that includes a capital injection of about $40 million and an overhaul of the trust structure.
The proposal would see the joint venture control all operations at the Reef complex, including the casino, hotel and entertainment venues.
Casinos Austria International announced yesterday it had signed a heads of agreement to sell its lease to operate Reef casino to the joint venture for $11.5 million.
The agreement also states Casinos Austria would have an option to sell all or part of its 13 per cent stake in Reef to the joint venture at 15c per unit.
Reef units, which have been suspended from trading this week at the request of the trust, hit a peak of $1.70 in August 1994 but last traded at 14.5c.
Both ATG and Touraust have agreed to sell their Reef unitholdings, a total stake of about 22 per cent, to the joint venture in return for equity.
Touraust has also agreed to sell its hotel and entertainment leases to the joint venture. It is understood Touraust wants $6 million for the hotel lease.
The manager of the trust, Reef Corporate Services, met on Monday to consider the proposal but has yet to reveal its view. The deal will also require approval from Reef's unitholders, bankers and the Queensland Government.
Reef Casino Trust has been desperately seeking an investor to satisfy bankers' demands that it cut its $105 million debt by between $40 million and $50 million.
Corporate advisory firm Grant Samuel & Associates was retained by the trust manager to help find such an investor but, according to a statement issued yesterday by ATG, advised "there cannot be confidence that a proposal ... will come forward that offers unitholders any residual value".
The partners in the Metroplex/ATG/Touraust joint venture, which was put together outside the Grant Samuel process, argue their proposal will offer Reef unitholders residual value as well as the opportunity to participate in the recapitalisation of Reef.
Metroplex owns casino licences in Subic Bay in The Philippines and has secured an 18 per cent stake in Perth's Burswood casino. Its involvement in the joint venture is through associate Sinophil Corp.
ATG owns Australia's largest locally owned hotel chain, Country Comfort, which is managed by Touraust.
Touraust also manages the Australis chain of five-star hotels for ATG. Australis operates the Reef hotel.
Touraust was a founder investor in Reef Casino Trust. Mr Darryl Courtney-O'Connor, chief executive of ATG and managing director of Touraust, is a director of Reef Corporate Services.
Casinos Austria shares rose 1c yesterday to close at 25c.
© 1997 Sydney Morning Herald
