Scenic Circle to cancel Latimer Square plans

Press, 24 March 1988, Page 31

Scenic Circle to cancel Latimer Square plans

I j. h “ By special correspondent i Scenic Circle Corporation, the Dunedin-based, hotel company, will cancel development work on its 6000 sq m vacant property next to Latimer Square, Christchurch. I The chairman, ) Mr Ralph Brown, said [after the. company’s p. annual meeting | yesterday, that, the; land would probably be sola, j J < [ "We are looking at various alternatives, i particularly the vacant land in Christchurch. I I think it will be sold.*’ . [[ I The I company had planned | to develop the vacant land with) an “on the park” theme.! [ "But we feel that Christchurch is. overstocked with,hotel accommodation at the moment. They just added 100 rooms to the Chateau I. Regency and there are another 350 rboms ion . the . Park Royal.” ' •[[!!''■ I Studies had indicated that there would, be no heed for more beds until l,996j~he!said. ' [[) [ The annual meeting

i was told that the company ; had sold the Whalers Motor Inn, at Picton, to a '(Christchurch business--11 man, Mr John Wilson. | I I ! The price was $1.7 1 million, and this would ! offset reported losses ! of , [ $3.9M. i [i|'[ Mr Brown said that the [[[[motor (inn had been sbld ![ )to Mr Wilson on Tuesday, pi (The price was more than the book value. I [[[[ [ Mr Wilson also owns the Picton Motor Inn. [ !),) The company might I) [[also. consider selling) a [| (hotel and leasing it back. ji The corporation owns , the Southern Cross Hojtel, Dunedin, the Lakeland ) Regency Hotel, Queenstown, the Golden Glacier (Motor, Fox Glacier, and the Westland Motor Inn at IlFrahz Josef (Glacier. | . I ; “The directors are coni [[sCious'of the necessity, in the current market [environment, to significantly [ reduce the company’s .debt-equity ratio and priority will be given) to this objective in the current year. j ); | [‘.‘As part of this recon-

struc)tion programme, the realisation of' I [certain assets) will be vigorously pursued.” ■[ . : ';[)[. • ■( ) Because bf the financial situation the company directors,[ Messrs))! Earl Hagaman, j Farqhar McKpnzie, and ['[[Stuart McLauchlan, had decided not to make any forward profit projections, he said. They expected it would be a most difficult and challenging)year, he said: The business ! climate began to change j rapidly in March [last year and the tourisip market had been) seriously affected by current monetary policy; Thb' company’s [efforts to raise accommodation and [servicd standards at [ its operations have been offset by a number of factors. I ' I ■' |i| i! ’ ' [ ; The adverse effects of the strong New Zealand ! dollar resulted in reduced numbers!of) overseas visitors [and encouraged New Zealanders I to )'| travel '< overseas.) High interest j rates, difficulties | with ! passing on [costs on room rates and tour [ pro-

grammes, ! unjustified wage! and ! salary increases, and; a rise in the number [of hotel rooms available in j Queenstown contributed to the $3.9M loss, MrJßrovfnisaid. ) [Directors’ fees of up to $25,000 (Were also voted by shareholders although Mr Brown said these need not be paid until the company [was in better financial shapej ’ ! Formed | in September, 1982,! the ! company was listed! in | December, 1986. It was previously known as Otago Development Corporation and when ! it floated, i in i November, 1986, its prospectus forecast a $1,088,000 profit for trie year to October, 1987. ! [Turnover ) for that, period was [ $13,081,000 and | the) trading profit, before interest and depreciation, was $1,279,000. The loss,) before extraordinaries, was $2,039,000 a|nd followed an. allowance of $3,365,000 for[ interest and depreciation. [ ’ ! . [ The net [loss was enlarged by extraordinaries of $1,8164)00' [