Saturday, 17 August 2013

The ( hotel ) corp 18/08/13

It`s nice when expectation comes to fruition .
    Firstly , It`s hard to believe that some still don`t understand how and why investing companies buy in  / sell out of companies . Perhaps , a lesson in shorting your own company is beyond them . This company has fallen from £3.35 , to less than a penny . So , selling out for a couple of pence difference as a favour for information , is not beyond the realms of human endeavour .
  Secondly , what is the value us mere mortals can ascertain ; I was pretty certain that ,at present the cash value , of The Hotel is / cash value 1.6p. Now we have past that point and I still hold , why ?

  The investment of approximately 50% of this hotel group has cost ,as far as we can tell £53 million . Dividends paid out of equivalent £20 million and cash of £2 million . Now leaves us with approximately £30 million shortfall . Thus current valuation , should be £1.60 per share , not the current 4p.

  Or by comparison with Peel hotels today  , a more suitable comparison ;
Share price 50p for 700 rooms . Means that The Hotel Corp `s 2,800 should actually be valued 4x , £7 million . Or £28 million pounds , which is 56p per share .

  This , of course is highly speculative and disregards costs of backing the current debt etc . A whopping £321 million . While Peel`s is only £12 million or 56% . The Hotel Corp has a net gearing of 76% . By any standards pretty impressive . Or , in lay terms , The Hotel is Greece, while Peel is Norway . Now, that`s another story.
  Current valuation of the actual hotels for Hotel Corp is approximately £450 million .A surplus over debt of £100 million. Of course , we own just over half the debt £160 million - £225 million . Leaves a current possible + £65 million , or £1.30 per share.
    Finally £1.60 + £1.30 + 56p +-    =  or £1.08 per share.

 So , most importantly keep an eye on the lender`s perspective on this share .Will they or won`t they stand by your man ?

    May your Prophet go with you


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