Scott Rochfort "January 9, 2009 ALREADY burdened with a heavily indebted PBL Media, the private equity firm CVC Asia Pacific now faces a faltering investment in the country's largest travel retailer, Stella Group.
Stella, whose operations include Harvey World Travel, Travelscene and Peppers Resorts, is pleading with its bankers for breathing space over the repayment of $860 million in loans after breaching the terms of one of its lending facilities.
CVC bought its 65 per cent stake in Stella from the collapsing Gold Coast financial group MFS Limited in February last year for $409 million.
At the time it appeared to be a bargain because MFS had wanted three times as much for the stake. But the $905 million debt that CVC inherited from MFS now appears to be creating problems for Stella and the private equity firm.
CVC reprieved the troubled group of a $25 million repayment due last month on a $320 million inter-company loan.
Another lender imposed a December 29 deadline for Stella's full-year accounts, and its holding company, Global Voyager Holdings, has belatedly reported a $42.7 million loss in the lead-up to Christmas.
Stella's earnings before interest, tax, depreciation and amortisation were $17 million. Before imploding a year ago, MFS had forecast the business would generate an EBITDA of $210 million in the same period.
The accounts were filed the same day that an industry journal, Travel Today, reported Stella's managing director, Rolf Krecklenberg, had quit. Mr Krecklenberg failed to confirm the report - his phone message said he was "out of town". But if true, it marks the end of any senior executive ties between the former MFS and its present ownership.
The chief executive of Stella Travel Services, Peter Lacaze, did not return the Herald's calls.
Stella's accounts reveal the perilous state of the company's finances. They show that CVC agreed to have a $19.3 million interest payment due late last month "capitalised" into equity and a $4.5 million interest payment deferred.
The company said "revisions" to the loan with CVC "improved headroom with respect to financial convenants".
"The company and its shareholders will continue to negotiate in good faith to agree further amendments to the agreement by June 30, 2009," the accounts state.
Its biggest lender, UBS, also agreed last month to revise its agreement over the repayment of a $700 million-plus debt.
And Stella revealed its South African hotel subsidiary, Protea Group, had been notified on December 17 by a lender to whom it owes $85 million that "it had committed a breach of the terms of its lending facility".
The breach occurred because the Stella subsidiary filed its full-year accounts late. Stella warned that if it were forced to repay the facility immediately it would impair $231 million in assets. Any writedown of this size would create problems for Stella, which in its June 30 accounts has total liabilities of $1.9 billion and total assets of $2.2 billion, including $1.4 billion of "intangibles".
MFS, now named Octaviar, went into administration in September. It still holds a 35 per cent stake in Stella."
Poor Stella...Poor Octaviar.. Could Octaviar creditors lose a % ie have less than 35%.. like CMH did if CVC Asia Pacific? tips in more cash?? Why such poor results? Will Rolf respond?
OCV Price at posting:
99.0¢ Sentiment: None Disclosure: Held
