3Cnergy is acquiring a portfolio of 17 UK hotels via a reverse takeover deal tentatively worth $389.3 million.
The assets are held under an entity called DTP Infinites, part of Thai conglomerate DTGO Corporation, 81%-controlled by Thippaporn Ahriyavraromp.
Thippaporn is the daughter of Dhanin Chearavanont, senior chairman of the Charoen Pokphand Group, one of Thailand’s largest companies with interests in agriculture, food and retail.
DTGO bought the hotels from Marathon Asset Management in 2019.
In a Bloomberg report on March 20, DTGO was said to be weighing a Singapore listing of a REIT of its UK hotels, potentially raising £200 million.
According to 3Cnergy on June 12, DTP Infinites' portfolio of 17 hotels has a total of 3,383 keys, spread across cities excluding London, such as Manchester, Glasgow, Liverpool and Birmingham.
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The hotels, operating under brands such as Crowne Plaza and Holiday Inn, are valued at just over $1 billion but collectively carry a net debt of $619.3 million.
3Cnergy will be hiring a new valuer to produce an independent valuation report.
As part of the deal, 3Cnergy will consolidate its shares in the ratio of 100 into 1.
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3Cnergy will then issue new shares to the seller at 33 cents each. The actual quantum will be determined by the final price.
3Cnergy is now controlled by a group of shareholders led by Tong Kooi Ong, who stepped down from his role as non-independent, non-executive chairman on Jan 28 2022.
Tong is also the executive chairman of The Edge Media Group, which owns The Edge Singapore, among others.
This group of shareholders, Phileo Capital, Champion Brave, Casi Management, Halfmoon Bay Capital and Golden Ring Worldwide, together hold 80.2% of 3Cnergy.
They have given their irrevocable and unconditional undertakings to vote in favour of this RTO deal.
For the year ended Dec 31 2021, the target group reported revenue of £88.2 million, which increased to £128.8 million for the following FY2022.
However, earnings dropped from £5.1 million to losses of £45.5 million.
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The numbers for FY2021 were distorted by some £39 million worth of property impairment losses that were reversed.
The numbers for FY2022 were similarly skewed by one-off numbers, specifically, property impairment losses of £31 million.
As an illustration, 3Cnergy's NTA per share (assuming completion of 100 into 1 consolidation) would be 1.04 cents as at Dec 31 2022. This number would be negative 4.21 cents per share, upon completion of the deal.
EPS, on the other hand, would be 20.41 cents and negative 4.76 cents pre and post-deal, respectively.
Gearing, meanwhile, would increase from negative 88.4% to negative 1,308.8%.
3Cnergy had wanted to focus on property development but has since sold off the sites meant for this business.
Its current focus, prior to this RTO deal, is on integrated property development management and real estate valuation and appraisal services.
"The company’s continued efforts in exploring and evaluating potential opportunities culminated in the proposed acquisition which is in line with the group’s plans to expand and rejuvenate its business through mergers and acquisitions," states 3Cnergy in its announcement on June 12.
3Cnergy acknowledges that the target group is both loss-making and is in a net liability position as at Dec 31 2022.
Nonetheless, it maintains that the deal is “beneficial”, especially after taking into account the prospects of the hospitality industry.
