Mitchell ... the team will meet on the new strategy going forward. - File

Rejected by minority shareholders of Pegasus Hotels of Jamaica, the team charged with selling the company's main asset has been forced back into a huddle to redefine and refine its strategy for getting the majority shares sold.

The deal-makers now say selling the hotel remains an option, but is still not the preferred route for divestment of National Hotel and Properties' 59.8 per cent of Pegasus.

"We will meet to finalise and put a stamp on the revised strategy to then officially announce and provide more information for everyone to have access," said Lissant Mitchell, senior vice-president Scotia DBG Investment, lead broker in the divestment process.

While Mitchell did not say what the revised strategy entails, he said the intention at this point is to get the shares sold en bloc, saying it was still the most efficient means available, especially with constraints on the timeline.

NHP is a subsidiary of state-owned Urban Development Corporation and the government is banking on the proceeds of the sale to boost its coffers this fiscal year.

At $12.50 per share, NHP's 71,865,384 shares are valued on the stock market at $899 million. But its fixed assets were last estimated at balance sheet March 31, 2009 at $5 billion.

"We will meet with the entire team to look back at the strategy and most efficient option," said Mitchell Wednesday, a day after a special meeting of shareholders refused to vote on suggested amendments to the articles of association.

The divestment team sought the changes on how the Pegasus board is selected, saying they would then be able to negotiate the best price for the shares.

The system now allows NHP to name six of 10 minority share-holders, and the combined parties select another two.

The divestment team has given no precise explanation as to why changing the articles now was so crucial to the sale price, but analysts believe it is meant to give a new majority owner a free hand to name a board, without having to negotiate with minority partners, or being blocked by them.

The alternative option outlined by NHP of selling the hotel as a going concern still remains a viable consideration, according to Wayne Chen, chairman of UDC.

"If the best offer has no problem with the articles then we will go ahead to sell, if we wish to change then we will go back to the minority shareholders and outline the terms of the sale and ask them to vote on changing the articles," said Chen.

"At that point failure to get the articles amended then we will look at selling the hotel itself," he explained.

Close the deal

The Jamaica Pegasus hotel, Knutsford Boulevard, New Kingston. - Photo by Kelsie Clarke

Further, Chen said that he is looking at a three-months time frame in which he expects the deal to close.

The divestment team includes key personnel form the UDC, DBJ and the Scotia team, as well as the office of the contractor general which, according to Chen, has been involved at every step and is overseeing the process.

The meeting is expected to take place by next week out of which will drive the information memorandum document to be published.

The deal-makers have received at least six written initial expressions of interest, said Mitchell, with requests to provide more information on the sale.

Asked directly, Mitchell said none of the six had requested the amendments to the articles nor suggested they say it as a problem.

The broker said, however, that as advisors on the sale, Scotia DBG thought it important and their responsibility to have addressed the issues which they see as material enough to impact the sale.

"Once you identify any material issue to impact the sale, then as advisors we have a responsibility to disclose and address it," he said.

Mitchell noted that when negotiations begin, it is likely the issue will come up again at the table, and that the buyer would likely request the change.

He said that until the team meets, no disclosure would be made on the exact strategy going forward.

Still any one party acquiring more than 50 per cent of the company's equity is required under stock exchange rules to make an offer, priced no lower than majority acquisition price, to minority shareholders of Pegasus.

sabrina@gleanerjm.com