Elegant Hotels Group, which owns and operates five freehold hotels on the island of Barbados, has entered into a conditional agreement to acquire the entire issued share capital of Swiss International in Barbados, the owner of the property trading as Waves Hotel and Spa, for $18 million. The agreement was made through Elegant's subsidiary Elegant Hotels (Barbados) Management.
The agreement to acquire Waves is subject to the completion of a credit agreement with the Group's bankers, The Bank of Nova Scotia, as well as the approval of the Central Bank of Barbados. The conditions are expected to be completed before the end of the month.
$5.46 million of the consideration will be paid to Swiss International's holding company, Beach Holdings SA in cash, and Elegant Hotels will assume Swiss International's existing debt of $12.19 million. A further $0.35 million will be paid to Paynes Bay for the business and fixed assets of Waves. Paynes Bay is owned by the current shareholders of Beach Holdings SA and carries out the day-to-day operations of Waves.
Following the completion of the transaction, in order to fulfill existing customer bookings, the property and business will be leased back to Paynes Bay until April 15 when the business will revert to Swiss International, together with the employment contracts of the staff engaged in the operation of the hotel.
The property will then be closed for renovation. The hotel will be refurbished, repositioned and ultimately repriced before being rebranded as 'Waves by Elegant Hotels,' and is expected to re-open for business in the middle of July.
The expected cost of the renovation and other expenditure related to the transaction is $4 million. The total acquisition and renovation costs of $22 million will be funded through additional credit facilities of $18.5 million as an extension to the Group's existing credit agreement with The Bank of Nova Scotia, an interest-free vendor loan of $2 million repayable over four years, and $1.5 million of the Group's existing cash resources.
"As we said at the time of our IPO last year, acquiring new assets both in Barbados and the wider Caribbean is a key part of our long-term growth strategy, and we continue to target a number of other opportunities of this kind," Elegant Hotels CEO Sunil Chatrani said in a statement.