Dolphin Capital, a residential resort investor, has agreed to sell its Playa Grande Golf and Resort project, including the Amanera resort, in the Dominican Republic for 64m to Third Point, the AIM-listed company's largest shareholder, which is acting on behalf of certain funds.
Miltos Kambourides, founder and managing director of Dolphin Capital, said the sale would enable the project to move on the next stage of development.
This disposal is in line with the the company's strategy to accelerate asset divestments and improve liquidity and follows the recent sale of its 49.75% stake in Cyprus-based Aristo Developers, and will also reduce the company's loans from 232m to 102m resulting in a pro forma debt/asset ratio for of 18.5%.
The 64m will be paid through 4.7m in cash, about 900,000 will remain in escrow to cover completion claims and liabilities, and the retirement of all of the company's 50m and $9.17m 2018 convertible bonds, the majority of which are held by certain funds managed by Third Point.
The buyer has paid a deposit of 4.7m, while the bonds will be cancelled when the transaction is completed.
The sale was agreed at an enterprise value of 140m, which represents a 10% discount of the project's carrying value at 30 June and will result in a loss of 15m, which will be recognised in the company's financial statements for the year ending 31 December.
The buyer will assume all 75m Playa Grande liabilities, of which 58m are loans. The company will also be released from liability and its guarantees from the 19m senior construction project loan with a consortium of banks in the Dominican Republic and the 34m project mezzanine financing facility with Melody Capital.
The sale is conditional on the lapse of a right of first refusal for the project in favour of its prior owner, who is required to pay a deposit equal to 10% of the consideration for the disposal within 15 days of receipt of a draft sale contract. It is not anticipated that this right will be exercised.
Shares in Dolphin Capital were up 24.27% to 6.99p at 1105 GMT.