Johannesburg - Queensgate Hotels & Leisure [JSE:QHL] , which has seen its shares dribble down to 1c following the loss of key hotel leases in Cape Town, is in a desperate bid for survival.
Queensgate looks in a tight financial squeeze after cash flow hitches resulted in the company losing key leases - including a valuable lease on the plush Radisson Hotel in Granger Bay.
Developments have already seen Queensgate's two prime movers - CEO Andrew Hubbard and financial director Holger Friedrichsen - falling on their swords.
Currently the group is headed by Colin Human, previously Queensgate's non-executive chairperson.
In an interview with Fin24.com, Human said it would not be over-simplistic to blame cash flow for Queensgate's predicament.
He noted that the 2008 global economic crisis effectively staunched investment flows from German backers, while at the same time the hotel specialist had recently suffered a lack of internal cash flow as occupancies dropped off markedly.
Queensgate was also hit when a standby equity facility of R50m (secured in late 2009 from a US-based investment company) was held up after the Reserve Bank declined to approve the transaction.
Asked whether there was anything worthwhile salvaging at Queensgate, Human said the group still retained several interests in the form of the Cape Town Hollow Hotel, the Cape Hollow, as well as an interest in a Kruger National Park lodge.
"We are still open for business."
' Restructuring a complex operation
While these remaining interest may not have the allure of the Radisson (which, after, all is positioned adjacent to the new soccer stadium in Green Point), Human added that a number of new opportunities were also under investigation.
"There is one that does not require funding... a significant development opportunity in Cape Town."
He stressed the restructuring of Queensgate was discussed daily. "Clearly we would not be going through this process if we did not think there was something worth salvaging at Queensgate."
Human, though, admitted any attempts to rescue Queensgate would require the support of not only shareholders (which include Mvelaphanda Holdings) but also creditors and other stakeholders.
"We will probably need a full two weeks to sort out the restructuring. It's a complicated structure with Queensgate Holdings and numerous subsidiary companies. There are inter-company loans, cross-guarantees and leases."
Human said it was critical to have the cooperation of creditors. "We hope creditors will interact with us. Any pre-emptive action would be a set back and could put a big hole in the ship before we've had time to get the sails up again."
Human said possible courses of action at Queensgate could include the disposal of "one or more" of the group's assets.
He also would not rule out the possibility of a initiating a reverse listing transaction. "A reverse listing transaction could be part and parcel of our restructuring efforts."
- Fin24.com