# OAK - Oaks Hotels & Resorts



## System (16 August 2010)

Oaks Hotels and Resorts Limited (OAK) is a hotel and resort operator in Australian accommodation market, the serviced apartment hotel and resort sector. OAK's property portfolio includes CBD apartments properties, resorts and villas. OAK’s properties are located throughout Australia and New Zealand, and in Dubai in the United Arab Emirates.

http://www.oakshotelsresorts.com


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## prawn_86 (17 August 2010)

These guys are still around? Last time i looked at them (a couple yrs ago) they were in the process of being taken over. Looks like that fell through.

Looks like someone else is buying up a stake, seems to me that the board is pretty keen to sell.


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## adobee (17 August 2010)

Oaks seems to have a close affiliation with Meriton Apartments and ofter gets the serviced apartment operations in there developements.. I am not sure what the profit is like but there operation seems pretty good..


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## prawn_86 (17 August 2010)

adobee said:


> Oaks seems to have a close affiliation with Meriton Apartments and ofter gets the serviced apartment operations in there developements.. I am not sure what the profit is like but there operation seems pretty good..




Yeh they are quite fairly priced and always neat and tidy. We often stay in an Oaks serviced apartment when we travel


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## bazollie (17 August 2010)

I've been in OAK since they listed and watched them go form $1 up to $1.80 odd. I then watched in horror as the GFC ripped the backside out of them. The usual story, I didn't think they would fall so far and thought that they would recovery really well , but to no avail. I am waiting on some good news to come out to accumulate some more so I can average down my costs. 

One positive to come out of OAK is their discount card for their apartments. 
I travel to Brisbane quite regularly and the Oaks on Charlotte is a very comfortable place to stay. 4 star quality and very handy to the Casino ( I mean CBD ) Using your shareholder card can save you a good amount of dollars compared to the standard retail rate.

Regards
Bazollie


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## oldblue (17 August 2010)

The Oaks on Felix is also a comfortable stay in Brisbane.

Not sure I'd be wanting to invest in the company at this time, though.


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## danbradster (23 February 2011)

prawn_86 said:


> These guys are still around? Last time i looked at them (a couple yrs ago) they were in the process of being taken over. Looks like that fell through.
> 
> Looks like someone else is buying up a stake, seems to me that the board is pretty keen to sell.




Turns out Brett's regional pub businesses were going bankrupt so he needed to sell some OAK to cover the bank loan, but the sale of the shares fell through and now two of his companies (super fund thingies) are in receivership.

Bad luck for Brett, or maybe bad planning and overleverage.  At least oak's ~$76m debt doesn't seem like overleveraged to me, but the bank still wants it reduced to ~$60m.

I am a holder and waiting for one of several news that are behind schedule.


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## notabclearning (27 March 2011)

Takeover bid placed at 35c. Any comments?


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## danbradster (28 March 2011)

notabclearning said:


> Takeover bid placed at 35c. Any comments?




It's ok, but I'm not selling.

My mum however did sell on market for $0.35.

I'd rather hold for the recovery and future dividends.

Aussie accommodation industry projections for CY2011 are very strong.  Add that onto Oaks' already strong HY2011 operating profit and we will have a ripper year, if neither Minor nor ANZ do anything to stop that.

OAK is my largest holding.


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## skc (8 April 2011)

danbradster said:


> It's ok, but I'm not selling.
> 
> My mum however did sell on market for $0.35.
> 
> ...




Looks like a good decision...OAK went biserk today and shot up to 46.5 cent... the takeover offer is at 35c.

In fact it has traded above the takeover price for some time. 

Any news/rumours?


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## danbradster (10 April 2011)

skc said:


> Looks like a good decision...OAK went biserk today and shot up to 46.5 cent... the takeover offer is at 35c.
> 
> In fact it has traded above the takeover price for some time.
> 
> Any news/rumours?




I did sell 33% of my holdings for $0.355, sadly.  But I still have a fair amount.

Iit may be a competing bidder looking to buy the receiver's shares for $0.36-0.45 then make a takeover offer for maybe $0.45-0.50.  Maybe 1% of the market cap was bought on market on Friday.

Another alternative is that an Australian competitor doesn't want Minor entering the Australian market, so they're sabotaging their offer...

The alternative offer is more likely though.


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## adobee (11 April 2011)

I heard there is no way competitors will let Minor get entry to australian market without paying a big premium.. thus they will put in competitive bids to really push this up ..

(Oaks slammed by Sydney City Council in court to shut down Harmony on Quay St and big proportion of Maestri Towers Sussex Street as serviced apartments as not zoned for short term stays..)


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## skc (11 April 2011)

adobee said:


> I heard there is no way competitors will let Minor get entry to australian market without paying a big premium.. thus they will put in competitive bids to really push this up ..
> 
> (Oaks slammed by Sydney City Council in court to shut down Harmony on Quay St and big proportion of Maestri Towers Sussex Street as serviced apartments as not zoned for short term stays..)




The release today didn't mention anything about other proposals. The management appears to be keen on going ahead with the capital raising (which has been delayed for ~6 months now).

I couldn't believe they said something like 'Clearly a $0.35 offer to shareholders is inadequate as the Oaks share price closed the week at $0.46 on Friday 8 April 2011'. It only traded there for 1 day FFS. Why not mention the $0.20 price they traded not that long ago?

I suppose they won't have a job anymore after the takeover...


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## adobee (12 April 2011)

not up to date on it but believe there is alot of family involvement on this one and intentions to change the board re-appoint the board etc etc ..


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## danbradster (13 April 2011)

adobee said:


> not up to date on it but believe there is alot of family involvement on this one and intentions to change the board re-appoint the board etc etc ..




36% of so of Brett's stock was taken by receivers, and Brett sold a further 5% to Minor (Thailand), so the Pointons have far less influence than previously.

Brett is looking to be reappointed as CEO and kicking out the majority of the board.  He'll be writing a letter to shareholders soon.

It'll be interesting, most definitely!

Right now I'm sitting on a nice profit after the recent spike to $0.45...but I'd still rather some financing certainty like a capital raising and fixing the Dubai situation!


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## skc (13 April 2011)

danbradster said:


> 36% of so of Brett's stock was taken by receivers, and Brett sold a further 5% to Minor (Thailand), so the Pointons have far less influence than previously.
> 
> Brett is looking to be reappointed as CEO and kicking out the majority of the board.  He'll be writing a letter to shareholders soon.
> 
> ...




The word is that anyone looking to buy that 36% stake also need to launch a full takeover for the company... that's the law apparantly. That's probably the cause of some excitement.

It's stayed at this level for a few days now so probably something real in the wings... pure speculation on my part howerer.


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## danbradster (13 April 2011)

skc said:


> The word is that anyone looking to buy that 36% stake also need to launch a full takeover for the company... that's the law apparantly. That's probably the cause of some excitement.
> 
> It's stayed at this level for a few days now so probably something real in the wings... pure speculation on my part howerer.




And with 5 or so bidders, $0.35 may not be the best offer...

$0.35 was simply the only bid taken to shareholders so far.  Not long to wait now, maybe a month for the receivers to sell.  And maybe a week for Brett to write his letter?


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## skc (9 May 2011)

One of the stranger takeover... RFG (Retail food group) taking over OAKs. RFG runs a whole bunch of food outlets, OAKs are all hotels.

This is from the announcement today...



> “Whilst ostensibly Oaks and RFG’s business formats and revenue drivers would appear disparate, on closer inspection the respective business models are closely aligned, attractively synergistic and provide a tangible opportunity to combine the relevant divisional strengths of both enterprises given their remarkable similarity.”




How? Where's the synergy? What are the shared competencies? The only thing they mentioned was the franchising model - drawing a pretty long bow imo. What else are they going to do? Cross sell donuts and coffees to the hotel guests?

And the two businesses have completely different capital requirement... the market will normally punish such a business by giving it a lower multiple. If I was a RFG shareholder I would definitely question such 'empire building' action of the board.

And last but not least - there is no mention of how RFG is paying for the acquisition - are they going to pay with donuts?!


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## danbradster (9 May 2011)

skc said:


> One of the stranger takeover... RFG (Retail food group) taking over OAKs. RFG runs a whole bunch of food outlets, OAKs are all hotels.
> 
> This is from the announcement today...
> 
> ...




They have directors in common, which means they likely understand how to combine them well.  They will pay part cash and part shares.


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## prawn_86 (9 May 2011)

danbradster said:


> They have directors in common, which means they likely understand how to combine them well.  They will pay part cash and part shares.




The only possible synergy i see is leasing out floors/areas to sell their consumer products. As SKC says i just dont see how it makes it worthwhile


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## skc (9 May 2011)

danbradster said:


> They have directors in common, which means they likely understand how to combine them well.  They will pay part cash and part shares.




The all cash offer will cost them $94m cash.
The cash/script offer (1 RFG + $2.6 for 10 OAK) will still require $45m cash.

OAK holders get to choose and I bet you they will all go for the cash now that RFG has fallen 9% on the news.

RFG has a cash balance of $9.6m as of last report, and they already have $77m in debt. I really think RFG shareholders are being short changed...

Interesting I wasn't aware of that the common directors... probably makes this thing more fishy as opposed to any insight to syndergies...


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## danbradster (9 May 2011)

skc said:


> The all cash offer will cost them $94m cash.
> The cash/script offer (1 RFG + $2.6 for 10 OAK) will still require $45m cash.
> 
> OAK holders get to choose and I bet you they will all go for the cash now that RFG has fallen 9% on the news.
> ...




Although the RFG offer is unlikely to succeed, since it depends on ASIC refusing to allow Minor's acquisition of 37% of the shares from the receivers.

I don't think it's fishy, the directors wouldn't want to lose their directorship in OAK and also send their other company broke.  They will want to benefit and grow their other company.

I am considering buying RFG on this short-term weakness.  I can buy RFG, wait for their offer to fail, then wait for the price to rise to where it started.

And even if the offer DOES go through, OAK is a great and profitable company for RFG to own, I'd want to be a holder anyway.


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## skc (9 May 2011)

danbradster said:


> Although the RFG offer is unlikely to succeed, since it depends on ASIC refusing to allow Minor's acquisition of 37% of the shares from the receivers.
> 
> I don't think it's fishy, the directors wouldn't want to lose their directorship in OAK and also send their other company broke.  They will want to benefit and grow their other company.
> 
> ...




RFG must have a cap raising to fund the purchase, right? OAK is pretty highly leveraged, and the banks wouldn't leverage up RFG that much more. They need equity to complete the acquisition (if it goes ahead) - I am just surprised that there was no mention what so ever about funding for the acquisition. May be it is a ploy to extract a high bid?


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## skc (12 May 2011)

danbradster said:


> I am considering buying RFG on this short-term weakness.  I can buy RFG, wait for their offer to fail, then wait for the price to rise to where it started.




So ASIC has granted the OAK shares to Minor, so Minor's holding is now >50% and the bid is unconditional. For some reason RFG didn't think that it needs to make an announcement on that?!

Surely their deal is dead. No let's see if RFG can go back up towards where it started at $2.8.

P.S. I bought a fair few this morning at $2.39 after the OAK announcement - so your plan is working out just fine. Thanks


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## danbradster (12 May 2011)

skc said:


> So ASIC has granted the OAK shares to Minor, so Minor's holding is now >50% and the bid is unconditional. For some reason RFG didn't think that it needs to make an announcement on that?!
> 
> Surely their deal is dead. No let's see if RFG can go back up towards where it started at $2.8.
> 
> P.S. I bought a fair few this morning at $2.39 after the OAK announcement - so your plan is working out just fine. Thanks




I bought some a few days ago at $2.52 then more today at $2.39.  $2.39 is seeming like a nice entry.  Good catch, you were quick.

"We are considering our options" is a rather ambiguous statement from management, but I guess that is the end of their offer.


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## skc (12 May 2011)

danbradster said:


> I bought some a few days ago at $2.52 then more today at $2.39.  $2.39 is seeming like a nice entry.  Good catch, you were quick.
> 
> "We are considering our options" is a rather ambiguous statement from management, but I guess that is the end of their offer.




As with any winning trade - should have bought more! But there was always a risk that RFG was going to raise their offer by 2 donuts per OAK share or something like that...

Unloaded through the afternoon and got may be $2.52 average for 70% of the position. The other 30% I will probably get out tomorrow. I do feel bad (well may be not that bad) for those existing holders who sold me the shares - but it's a zero-sum game...

RFG on its own is not a bad company but they are not exactly cheap. Not to mention the fact that these directors have shown that they are not worthy of my trust (and money).


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