Luxury resort investment company Dolphin Capital Investors sells private island development off the coast of Panama at a loss. Dolphin Capital sells the 60% interest in Pearl Island to Grivalia Hospitality SA for a cash payment of €27m.
The implied enterprise value of the project of €63m is a 32% discount to the carrying value of the asset as at June 30, 2016 and will result in an €27m loss on the sale, said Dolphin Capital. The sale price is also a 7% discount on Dolphin Capital's €29m cost of investment in the project.
The deal is dependent on a corporate restructuring of the project to allow Grivalia to own shares directly in the subsidiaries that own the project, as well as the consent of hotel operator Ritz Carlton and the project's senior lender Banistmo SA. Dolphin Capital said it expects these conditions to be met or waived by the end of March.
"The disposal of Pearl Island, in addition to those made of Aristo Developers and Playa Grande, further underpins our commitment to delivering value for shareholders," said Andrew Coppel, chairman of Dolphin Capital.
Grivalia Hospitality is the Luxembourg-based tourism and hospitality subsidiary of Grivalia Properties REIC and this transaction constitutes its first investment. The agreed price for the stake is €27m in cash, of which €1m has already been disbursed as an advance payment, while another €24m will be paid upon the completion of the transaction and the remaining €2m will be deposited in an escrow account for a period of 12 months.
One of the largest privately owned islands in Panama’s Las Perlas archipelago with a total land area of 13.23 square kilometres, Pearl Island is to be developed into a unique high-quality, eco-friendly resort with at least three hotels, as well as villas and residential units.
The WFW team advising Grivalia Hospitality was jointly led by London corporate partner and head of the Hotels Group, Felicity Jones and Athens Partner and head of the Greek Corporate, projects and finance practice, Virginia Murray.
Virginia commented: “This acquisition represents a major commercial step for Grivalia Hospitality and we are delighted to have been able to support them with our corporate and hotels expertise in this new venture”.
