Part of an article in this weekends papers;In a funny way I...

Part of an article in this weekends papers;

In a funny way I think with each crisis it has to face and survive that NLG will get stronger as the article says the banks cannot afford to let the company fail..

http://business.brisbanetimes.com.au/business/damaging-cascade-if-hedley-topples-20090701-d58n.html

HLG, in which Hedley has an interest of about 60 per cent, leases most of these pubs to another listed group, National Leisure and Gaming. Tom Hedley has a 19 per cent stake and, until recently, was a subordinated lender. This company is also heavily geared.

HLG's other major lease holder is Coles which will be desperate to retain the lease on these pubs, the development of which is a major plank in its business strategy.

National Leisure and Gaming is probably in a more parlous position than HLG. It has a loan from NAB for $180 million and lease payments to make to HLG. Experts contend that it would be struggling to pay both these expenses from operating earnings.

However, NAB cannot afford it defaulting on its lease payments because the licence to operate the pubs would revert to HLG and the bank would be left with a loan over a company with no assets.

Even if administrators were voluntarily appointed, NAB would probably move to ensure lease payments were paid in order to avoid this outcome.

In the short term this is unlikely to happen. But this house of cards is probably not sustainable in the medium to long term. It will need to be sorted out.