Wednesday, September 17, 2008

Rodd's Deal, inching forward....

A lot of people ask me nearly every day "what's happening with the Rodd's deal" and I don't think anyone has a good answer, even the Rodd group. As most people following the deal know the Rodd's publicly announced last November they were putting their business up for sale. Ernest Young were engaged by the Rodd family to find a buyer and this spring after working out some issues with the Province they put together a small prospective for potential buyers. Unfortunately we were interested in buy the Company through the purchase of shares with us assuming the debt but the consultants were also giving potential buyers the option of bidding on individual properties or the whole lot. We declined to bid as we didn't want to waste a lot of energy trying to figure out what the company was worth and then find out that a few of the properties might be severed from the assets. Sort of like saving up to buy a bicycle when you were young and finally getting there with the money only to find out the wheels were missing? I do understand they received some proposals at the end of August but they are a long way from getting a deal done. One of the big issues standing in the way will be financing as the credit markets have all gone underground (dried up) particularly with anything related to tourism. The Rodd portfolio has great potential but they do need some upgrades and a stronger international branding if they expect to increase their occupancy. The relationship with the neighbouring golf courses and the hotel will be an integral part of making the sale happen. The Province has committed to calling for proposals this fall to lease or sell the courses and the quicker the Province get this process underway the more likely we’ll hear there is finally deal for Rodd's. A number of years ago there was talk that David Rodd was inches away from doing a deal with a REIT (real estate investment trust) but the timing was at the end of the big "reit hay day" and it didn't happen and I'm afraid if the Rodd's and the Province can't find a suitor to close the deal by January 2009 then they will miss another timing opportunity. These are my own comments... "timing is the thing that deals are made on" and if this deal isn't done soon then "hold the eggs"...as there will be no one for breakfast....

3 comments:

Jevon said...

I don't get why they don't just re-flag all these properties and get them in to the international sales networks.

Rodd Charlottetown = Westin
Rodd Confederation = HOJO
Crowbush = Intercontinental Brand
etc,..

You just can't make it as a local chain, especially with habits moving so much to the web., and especially in a market with low occupancy rates already.

Anonymous said...

What would Wally think of all of his sweat equity being put to market like an estate auction.

I guess Burger King has knocked the next generation out of contention...

You'd think family pride would instill some drive to turn this collapsing enterprise back to life.

Hopefully the 'Walker Group' from Alberta will sniff once again and maybe bite this time. Afterall, the words 'fire sale' are bing bandied about throughout the industry.

Anonymous said...

Any buyer who is familiar with the current Rodd's management team would be willing to pay a premium (above that based on recent operating results) for these properties.

Best advice is to make the purchase, replace top management, and watch how these properties can really perform.