Hotel Grand Central to acquire Novotel Palm Cove Resort for A$10m

4-star resort hotel added to portfolio.

In a disclosure to the Singapore Exchange, HGC announced that through its wholly owned subsidiary, Hotel Grand Chancellor (Cairns) Pty Ltd, it has entered into an agreement on 3 October 2013 with third parties to acquire the Novotel Palm Cove Resort and its business for A$10 million.

The purchase consists of approximately 36,461 square metres of freehold land contained within Lots 7, 10 and 11 on SP 189716 together with all building and improvements and the Plant & Machinery used at the building.

The Novotel Palm Cove Resort is a 4-star resort hotel and conference centre located at Coral Coast Drive, Palm Cove, Queensland, Australia. It is approximately 1 km from the Palm Cove Beach about 25 km north of the city of
Cairns, a major centre for the region known as Tropical North Queensland.

Tropical North Queensland is one of the most popular holiday destinations in Australia for both domestic and overseas visitors. The property is a low rise resort building comprising 140 accommodation rooms, a restaurant and a bar, 7 meeting rooms, gymnasium and 2 swimming pools.

As set out in the agreement, a deposit of A$50,000 was paid to a stakeholder upon execution. A further deposit of A$950,000 shall be paid to the stakeholder upon the contract becoming unconditional. The balance of the purchase price of A$9,000,000 would be payable on Completion Date.

The purchase is subject to the Purchaser being satisfied that the property is suitable for the Purchaser’s requirements following the Purchaser undertaking a due diligence investigation of the property. The time for satisfaction of this condition is 30 days after the date both parties have signed the Agreement.

The date of completion will be the latter of: 60 calendar days after the contract date subject to the Purchaser’s due diligence condition being met within 30 days of the contract date and the vendor providing vacant possession; 7 business days after the granting of a transfer of the liquor license and the vendor providing vacant possession.

Either party may terminate the agreement if completion does not take place by 16 December 2013, and the agreement will ultimately come to an end on 28 February 2014 if the conditions of either party are not satisfied.

The proposed acquisition will enable HGC to expand on its presence in the hotel industry in the state of Queensland, Australia. HGC currently operates the Hotel Grand Chancellor in Brisbane and Surfers Paradise. A comprehensive review of the hotel will be undertaken with a view to re-branding the property as Hotel Grand Chancellor, Palm Cove upon settlement.

The purchase is based on a willing buyer and willing seller basis and after taking into account the present and future accommodation market in Palm Cove. No valuation has been carried out by the Purchaser on the property.

The purchase will be financed by the Purchaser’s own funds. The directors and substantial shareholders of HGC have no interest either direct or indirect in the transaction.

Based on the prevailing exchange rates, the effect of the transaction on HGC ‘s earnings per share and net tangible asset per share is not material for the year ending 31 December 2013.

Having regard to the relative figures for the Proposed Acquisition computed on the bases set out in Rule 1006 of the Listing Manual, the Proposed Acquisition is a “Non Discloseable Transaction” under Rule 1010 of the Listing Manual. However, the Board has decided to disclose the acquisition to enhance the corporate disclosure standards of the Company.