A popular resort in Rarotonga, Cook Islands, is looking to restructure its existing shareholding and raising capital to finance its expansion, adding six units. The project is listed on the Pacific Trade Invest (PTI) New Zealand’s Pacific Hub trade and investment website. The existing group of shareholders purchased Castaway Resort (Castaway Resort 2012 Ltd) in May 2012. Two of the five investors who have 25 per cent of the shareholding manage the resort under a contract. The other three shareholders are prepared to exit the ownership.
This will allow a new structure to be put in place so that the managing shareholders can increase their shareholding to better reflect the contribution they are making to manage the resort while they operate the resort on a day to day basis and the consequent lift in its value.
Since its purchase in 2012 as a property needing refurbishment, much has been achieved in bringing it up to a good standard. For instance, all facilities have been upgraded; a beach bar has been established and the resort restaurant refurbished; a comprehensive marketing programme has been put in place that has resulted in occupancy levels rising from 35 per cent to 75 per cent.
Castaway Resort has achieved excellent ratings on “Trip Advisor” at 98 per cent, and consistent high rankings with Expedia and Booking.com. It is rated one of the top seven out of 78 accommodation providers in Rarotonga, having thus become a strong performing resort in the mid-price range in the Cook Islands.
Also, Castaway Resort was a finalist in three categories in the 2016 Air New Zealand Cook Islands awards: Best 3-star self-accommodation; Best Restaurant & Bar; Best Customer Service.
While there are several finance restructure options available the present operator-investors’ proposal is to buyout the three existing investor shareholders so that their shareholding can be increased; build six additional units; move the restaurant and kitchen to the beach front. The operator-investors say, their bank has agreed to finance this as it would be more beneficial to the business.
Castaway Resort is completely unit titled with a Body Corporate in place which allows the units to be sold off individually for a high profit (if the shareholders wish to do so at a later date).
To enable this to occur new shareholders are sought. Ideally, the new shareholders will have understanding of the industry and can contribute via their directorships to the operation of the resort. The resort company has the capacity to borrow additional debt funding and the Bank has indicated interest in doing this. Any increase in debt would occur only after the shareholding structure has been changed.
Castaway Resort 2012 Limited will provide a dossier of information to parties interested in the proposal. These would be: Full financial projections, incorporating the six new units; Undated valuation of the resort; Details of the projected restructured Balance Sheet for CRL; A proposed “Shareholders Agreement” once the shareholding structure has been agreed and a full physical due diligence process in Rarotonga.
The operator-investors says, “This paper is a proposal only and can be withdrawn or amended at their discretion.
Full details of Castaway Resort can be seen at www.castawayvillas.com
For more details email Pacific Trade Invest Chief Investment Officer Manuel Valdez at firstname.lastname@example.org