Stella suitor wants bigger slice of the pie
The Gold Coast Bulletin says that embattled Gold Coast-based funds manager MFS Ltd may well have to sell more of its key assets than it had planned in a bid to stay afloat.
CVC Asia Pacific is one of several buyers who are said to be seeking as much as a 65 per cent stake in tourism and travel business Stella, which was amassed by MFS for a total cost of about $1.9 billion in the past three years.
The private equity company has been touted as the most likely buyer of the business, after spending the better part of last year undertaking extensive due diligence as MFS’s preferred partner.
A successful sale could deliver the lifeline needed for MFS which has been embroiled in the global credit crunch after revealing an uncomfortably high group debt last week of $1.69 billion.
In the past year, MFS had been seeking more than $1 billion for a half-share of Stella, and earlier this month had placed an enterprise value of $2.8 billion on the Surfers Paradise-based tourism company.
Stella owns the Harvey World Travel business and the Peppers and Saville hotel brands, and has forecast earnings before interest, tax, depreciation and amortisation of $220 million this financial year.
Market sources say CVC, which walked away from a chance to snare 50 per cent of Stella last November for between $1.6 billion and $1.8 billion, may be negotiating for a bigger slice of the company.
MFS’s financial woes have given the predator significant leverage in negotiations, with some sources suggesting CVC could snare more of Stella for the same price it previously placed on the table.
An MFS spokesman declined to comment on the speculation.
He said the company continued to negotiate with interested parties and it was not prepared to reveal details of any discussions ‘until we are in a position to announce a deal’.
MFS is at the mercy of a sale progressing since the company’s high-profile shellacking on the share market on January 18.
MFS shares suffered a 69 per cent fall to 99c that day after announcing plans to raise $550 million as part of a separation of Stella from its funds management business.
Although CVC Asia Pacific remains the most viable buyer of Stella, several prospective buyers were flushed out after the MFS share rout earlier this month.
A Report by The Mole from The Goald Coast Bulletin
John Alwyn-Jones
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