The Development Bank of Jamaica has hired investment bankers, Scotia DBG Investments, as its lead broker for the sale of government's near 60 per cent stake in the Jamaica Pegasus hotel, it was announced on Thursday.

"As lead broker and advisor, Scotia DBG Investments will be responsible for providing brokerage and advisory services relating to the identification of the most appropriate time and method of disposing of the shares," said DBJ.

The development bank is managing the divestment on behalf of another government agency, the Urban Development Corporation (UDC).

Scotia DBG yesterday declined disclosing how much it is being paid, but assistant vice-president Chris Chin-Loy said it would be a percentage of what the hotel is sold for.

UDC Shares

The UDC, through its subsidiary, National Hotel Properties (NHP) holds approximately 71.8 million shares or 59.8 per cent of the listed company that owns the Pegasus, a more than 350-room property in the New Kingston business district of the Jamaican capital.

The Pegasus, which has just celebrated its 35th anniversary and is ranked as the island's leading business hotel and among the best in the English-speaking Caribbean.

But the hotel, which has been through a succession of international management companies, has had a hard time making money, only returning to modest profitability in recent years after, ironically, domestic managers were given full reign over its operation.

For the financial year up to March 2008, the company returned profit of $39 million or 32 cents per share, slightly down from the $41 million of the previous year, when the EPS was 34 cents

However, for the first six months of the current finical year, up to September 30, Pegasus, in unaudited results, reported net profit of $40 million on sales of just under $400 million.

Total assets

The company, according to those second quarter financials, had fixed assets $4.3 billion and total assets of close to $4.5 billion.

However, when the company's shares last traded on the Kingston exchange on December 5, the $17 price for stock gave it a market value of around $2.1 billion.

It has not been decided what model will be used to value the company, as the UDC is withdrawing in accordance with its mandate from the Golding administration to return to its core business development.

There is as yet no preferred buyer, but the UDC, apparently, prefers to dispose of its shares to a single buyer.

"We have two options: to re-issue the shares to the market, failing not being able to find a strategic buyer to take over all the shares at one time which is the preferred option," said Chin-Loy, who heads of brokerage operations at Scotia DBG.

But before all that, Chin-Loy pointed out, the first step will be to evaluate the property and set a reserve price.

"The next step then is to decide on whether to do a re-issue of the shares or find a strategic buyer," he said.

sabrina.gordon@gleanerjm.com