Issa lands sweet deal for Pegasus shares

John Issa confirmed the close of the deal to sell 37 million shares representing 30 per cent shareholdings in The Pegasus hotel of Jamaica in a victory for minority investors who negotiated a substantial 71 per cent premium on the price Kevin Hendrickson paid Government to acquire the hotel.

Issa represented minority shareholders, who rejected a previous offer by Hendrickson to buy the shares at J$13.14, the same price at which the state-owned Urban Development Corporation sold its 59.81 per cent stake.

Issa and other holdouts were able to secure J$9.36 more or 71.2 per cent atop that price.

"We have been negotiating with Kevin Hendrickson for some time now to achieve this result, and we got J$22.50 per share," Issa told Wednesday Business.

"Actually, the value of the company at $22.50 is about J$2.7 billion, so effectively, the Government's sale left a great deal of taxpayers money on the table," he said.

Hendrickson paid US$11 million, which then amounted to less than J$1 billion, for the 59.81 per cent stake in the hotel company. The J$13.14 per share deal then valued the company, whose sole asset is The Jamaica Pegasus hotel, at J$1.58 billion.

The transaction, which was executed on the Jamaica Stock Exchange Tuesday morning, immediately pushed the stock price to a new one-year high.

"I did not bid, and was available if asked for advice; but they (Government) never did, which is really a shame," Issa remarked.

Issa held the post of chairman for The Pegasus hotel for some eight years ahead of its sale.

Hendrickson's share

With the sale of the 37 million shares Tuesday, Hendrickson's company, Quivin Holdings, now owns 93.4 per cent of the property.

Along with the sale of his shares of 9.2 million, Issa said the group he represented included Harry Maragh; Ray Chang; Joseph Linkee-Chow and three unnamed foreign investors in an offshore company called Middle East Ventures Limited; Capital Finance Limited; and Pelican Securities Limited.

Hendrickson was said to be out of office at a meeting and did not respond to requests for comment on this story.

Lance Hylton, the lawyer for Quivin Holdings, said a voluntary takeover offer will be made to the remaining 800-plus shareholders for the remaining 6.6 per cent or 7.93 million shares at the same price of J$22.50.

The remaining shareholders include general manager of the hotel Eldon Bremner's three children, and Karl Wright, past head of Victoria Mutual, Building Society who Issa said was off the island at the time of the negotiation.

Hylton said the offer would be made next week with a four- to five-month period allowed for take-up.

Already, he said, Quivin has had indication from some shareholders wanting to sell 1.5 million of the shares outstanding.

Hendrickson has previously signalled that he would delist the hotel company if he got to the required 90 per cent ownership threshold.

Hendrickson's company Surrey Hotel Management Limited will take over operations of Jamaica Pegasus on October 28.

Hendrickson has committed up to J$800 million in new capital investment in the hotel, to buy its old equipment and fixtures and upgrade it over a three-year period.

A full refurbishment of the hotel is expected to take place starting in 2012.

sabrina.gordon@gleanerjm.com