last drinks

A GROWING number of the state's pubs face one last closing time as they struggle with heavy debts and falling revenues. More than 200 hotels statewide are already in breach of their banking covenants, industry sources say.

One joke suggests bankers have become the state's biggest publicans as they hold most of the equity left in the businesses.

Now the dire conditions may claim another victim.

One of the heirs to the Laundy hotel empire faces the ignominy his ailing hotel business being wound up after his father declined to tip in more cash.

Stuart Laundy, 36, the youngest son of Arthur Laundy, 68, faces the loss of the Heritage Hotel in Wilberforce, near Windsor, after receivers were appointed last week.

He could also be forced to sell his Mosman home overlooking Middle Harbour to repay a $6 million loan from BankWest - now a part of the Commonwealth Bank - and a $1 million tax bill owed by the hotel.

The BankWest loan is secured against the leasehold of the tavern-style hotel and a nearby bottle shop that together are worth less than the $6 million.

BankWest's decision to appoint receivers is a sign of the banking industry's loss of patience with the state's pubs. Banks have lent the NSW hotel industry about $7 billion in an aggressive investment push into the industry over the past five years.

About 30 per cent of the total, or $2 billion, is hard to recover because of the plunging value of hotels. Of this, the Commonwealth Bank-BankWest has an exposure of about $420 million.

Banks were lending borrowers up to 80 per cent of a pub's valuation at the peak prices, but the values of many of these businesses have fallen to just 60 per cent of what they were when the loans were written.

The banks had the opportunity to start forcing sales last year but held on in the hope that the market would recover. Some fear they have left it too late, a decision they may regret as values plummet. More pubs are expected to collapse in coming months as banks become more aggressive in recovering their loans.

A receiver, Jack Bournelis, of the corporate insolvency firm PPB, yesterday appointed a valuer to assess how much the Heritage Hotel might sell for. The hotel was the first that the Porsche-driving Stuart Laundy owned outright and separately from his family's empire.

Stuart's grandfather began in the industry in Rozelle in 1945. Under his father Arthur the portfolio has grown to more than 30 premises across NSW and includes a stake in a listed pub operator, National Leisure and Gaming.

The NSW pub industry was yesterday shocked that one of the heirs to the Laundy empire faced the forced sale of his hotel.

It is understood Arthur Laundy's decision not to put in cash to help his son was not triggered by a falling-out between the pair, or a lack of funds on Arthur's part. Rather, Arthur, who was named Hotelier of the Year by the Australian Hotels Association three years ago, has had other financial commitments to meet - and three other children to consider.

Arthur has put more cash into the struggling National Leisure and Gaming as its shares have fallen from 40 cents at their peak to just 0.7 cents. He has lost millions as the value of his 15 per cent stake has shrunk.

His unwillingness to put more cash into his son's business echoes the predicament of a multi-millionaire Darling Point property developer, John Beville, who did not bail out the six hotels of his son Malcolm, 36, which were placed into liquidation last month owing $55 million.