Dolphin Capital Investors has entered into an agreement for the disposal of its Playa Grande Golf and Resort project, including the Amanera resort, in the Dominican Republic to Third Point LLC. The deal is being done an enterprise value of EUR140 million which represents a 10% discount to the project’s carrying gross asset value as at 30 June 2016 and will result in a loss on sale of EUR15 million to be recognised in the company’s financial statements for the year ending 31 December 2016.
Third Point will assume all Playa Grande liabilities which amounted to EUR75 million at 30 September 2016 (EUR58 million of which were loans). DCI will also be released from liability and/or indemnified under its guarantees of the EUR19 million senior construction project loan with a consortium of banks in the Dominican Republic and the EUR34 million project mezzanine financing facility with Melody Capital.
The consideration of EUR64 million will be payable through EUR4.7 million in cash (of which approximately EUR0.9 million will remain in escrow to cover certain potential post completion claims and liabilities) and the retirement of all of the Company’s EUR50 million and US$9.17 million 2018 Convertible Bonds (the “Bonds”), the majority of which are held by certain funds managed and/or advised by Third Point (together with any accrued interest on the Bonds). The Acquirer has paid a deposit of EUR4.7 million, while the Bonds will be cancelled upon the completion of the transaction.
Following the Disposal and the repayment of the 2016 Convertible Bonds in 31 March 2016, DCI itself will not have any further recourse loans or guarantees and any remaining Group debt is on a non-recourse basis at project level. The Disposal reduces the aggregate DCI Group loans from EUR232 million as at 30 June 2016 to EUR102 million resulting in a pro forma debt/asset ratio for the Group of 18.5% (31 December 2015: 26%).
For the purposes of the AIM Rules, the Disposal constitutes a related party transaction in view of Third Point’s position as a substantial shareholder in the Company. As required by the AIM Rules, the Directors consider, having consulted with the Nominated Adviser, Grant Thornton UK LLP, that the Disposal is fair and reasonable insofar as other shareholders are concerned. Completion of the sale is conditional on the lapse of a Right of First Refusal (“ROFR”) in relation to the project in favour of its prior owner. In order to exercise this ROFR, the prior owner is required to pay a deposit equal to 10% of the consideration for the Disposal within 15 days of receipt of a draft sale contract from the company. It is not currently anticipated that this right will be exercised. They say that the disposal follows a broad marketing exercise concluding in a competitive process during which the company also received significant interest for Playa Grande from another reputable investor.
DCI : Dolphin sells Playa Grande golf resort