Pub group warns it may go into receivership

AILING pub group Hedley Leisure and Gaming Property Fund has cautioned that it may be placed in receivership if it fails to extend $745 million in loans from a syndicate of banks headed by ANZ. The fund issued the warning when it announced it had been suspended from trading after it failed to lodge its full-year accounts by the deadline. HLG was one of eight companies that were tardy in filing their accounts this year. They include Allco's listed fund that invests in mortgage products, Max Trust and Elders, due to its $400 million recapitalisation. The HLG loans are due to be repaid in August next year and HLG is in negotiations with the syndicate to extend this until 2012. Executive chairman Colin Henson told investors in an announcement to the Australian Securities Exchange that there was "a significant risk" that HLG's extension negotiations with the banking syndicate might fail, which would force the company to repay the $745 million immediately, a move that would trigger HLG's corporate undoing. "It would be unlikely that HLG could continue as a going concern," Mr Henson said. HLG valued its "investment property" pub assets at $1 billion in its accounts at December 2008. At the end of June, HLG warned that the value of its 89 pubs might be impaired in the accounts for June 30. "The asset revaluation process is nearing completion. In view of the decline in pub values over the last 18 months, this valuation process is estimated to result in a revaluation and impairment adjustment," the company said. The company has a policy of revaluing 33 per cent of its properties each year. Its loan-to-value ratios are high. HLG owns but does not run 89 pubs. It leases them to operators including the listed National Leisure and Gaming. It listed at $3.50, but the units last traded at just 27?. The company hopes to file its accounts by the end of this month. HLG's failure to file its accounts comes amid a slump in the value of NSW pubs of at least 45 per cent, and as rival listed pub owner ING Real Estate Entertainment Fund announced a $54 million loss due to the falling values of its 36 pubs. Other listed companies that failed to report by the deadline include heart pump company HeartWare International and retractable syringe company Occupational & Medical Innovations, Cairns cruise and diving company Macro Corporation and small-cap Sydney software companies ComOps Limited and Corum Group.