one hint of comfort

I have just reviewed HLG's ann.'s and their latest market update (dated 23.5.08) and broker presentation (26.5.08) highlights two important pieces of (one of which is by virtue of no inclusion)

1) There was no mention of or any hint of poor performance re rents (from NLG) - indeed in the broker presentation specifically it states that all leases from NLG have been paid (current rental quarter will be the true litmus test however)

2) p.4 of market update HLG re-iterates the future performance of the hotel sector in NSW and NLG in particular, where history shows smoking bans had initially bad effects on business performance in Qld and Vic, BUT that these improved over time ( I guess as people reverted to old habits)

So given bank's stated requirement to have an operational business plan reviewed by an external party (ie confirming that future income is expected to improve) and given historical performance re smoking bans shows improvement ( which could be confirmed by NLG's QLD properties) hopefully bankers will see there is a short-term hole that needs to be filled and that with reasonable expectation revenues should improve - hopefully the bank's credit guys will take a pragmatic view that future debt serviceability is expected to be present (re-inforced off course by the NAB not wanting a bad debt on their books - not at this time of credit crisis - they may already have an exposure to Octavier...)

Overall NLG is a difficult share to invest in - with high risks present - but also very high possible rewards. Go into any investment decision with open eyes - not blind faith...for me its risky but worth a punt - not putting my house on it...but please DYOR


On page 4 they talk about the experience of Qld and Vic when smoking bans were introduced - that business performances initially fell once people got used to it their