Young pub baron Rick Munday has blamed uncertainty created by the Victorian Government’s gaming licensing process and falling pub values for the collapse of his empire.
Munday Group, which holds the leaseholds to eight pubs in Victoria and two restaurants in the regional Victorian town of Geelong, has had the pubs on the market since late January but has failed to find a buyer.
The company’s main lender, Nab, appointed receivers PPB on Friday and they will now run the sale process.
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But Munday claims the job of selling the pubs has been made difficult by the Victorian Government, which is in the process of restructuring the licensing of the state’s lucrative gaming machine sector.
Currently, just two companies hold the licenses to run the state’s pokies – Tabcorp and Tattersalls. But under a new regime to come into force in 2012, the individual licenses to the state’s 27,500 machines will be sold off individually.
That auction process will start on 10 May, which is making it difficult for buyers to assess the value of pubs currently up for sale.
“We have fallen victim to weaker portfolio valuation and an underperforming sector due to the new regulations introduced by the state government earlier this year,” Munday said in a statement released yesterday.
Munday Group’s portfolio had been expected to fetch $50 million but is now likely to sell for around $45 million.
“With uncertainty in the market and the unknown prices for gaming machine entitlement has made the selling process very difficult,” Munday said.
But while Munday’s business is on the rocks, north of the border in Sydney young hotel and nightclub operator Justin Hemmes appears to have picked up a bargain with the purchase of The Beresford hotel in the suburb of Surry Hills.
Hemmes, who owns a string of upmarket venues including Establishment, The Slip Inn and Ivy, paid $14.6 million for the pub at auction yesterday.
That’s well below its original asking price of $25 million and far less than the $37 million the previous owner, Ashod Nassibian, is reported to have spent buying and renovating the hotel.