Published: April 30, 2008
The following press release was received from Prestige Holdings Limited (PHL).
The Board of Directors of Prestige Holdings Limited (“the Company”) at its meeting of 23 April, 2008 took a decision to exit the Puerto Rico market. The Company entered this market in 2004, and managed the only T.G.I. FRIDAY’s restaurant in Puerto Rico to a condition of viability, before we acquired a 51% shareholding in Prestige Puerto Rico Restaurants, Inc. (“Prestige Puerto Rico”).
Since then, Prestige Puerto Rico built two additional restaurants in San Juan, but had been experiencing increasing losses in a recessionary economy that was plunged into crisis in May 2006 when the Government was shut down for two weeks due to gridlock in the Legislature over Puerto Rico’s budget. In November 2007, the Company acquired, without cash outlay, the remaining 49% shareholding in Prestige Puerto Rico, in a transaction that involved settlement by our former partner, of significant financial obligations to the business and to the Company.
Due to the worsening economic conditions in Puerto Rico, very recent further political uncertainty (the Governor and twelve of his associates were indicted by a United States Federal Grand Jury for corruption; deepening gridlock in the Legislature on fiscal reforms) and expert indicators pointing to a protracted recession, the Company decided not to consummate a new proposed Joint Venture partnership in this subsidiary that was signalled in my 2007 Chairman’s Report to Shareholders.
In reviewing the business during the first quarter and year to date, and taking into consideration our subsidiary’s and the Group’s performance during the previous two years, the Board of Directors decided to exit the Puerto Rico business to allow management to bring greater focus to the viable business units of our Group. Victor E Mouttet Limited, the Parent Company, as a means of facilitating that decision, offered to purchase our shares in Prestige Puerto Rico for the nominal sum of US$100 and the assumption of our significant obligations for Prestige Puerto Rico. Having considered all of the options available to the Company, the Board of Directors, in the absence of the Parent Company’s appointed member, who declared his interest, decided that it was in the Company’s best interest to accept that offer from the Parent for a clean break from this market.
This transaction would result in a loss of $6.1 million to the Company based upon the carrying value of this investment in our consolidated accounts at 30 November, 2007, plus subsequent advances and commitments, as well as $7.1 million of estimated net operating losses incurred by Prestige Puerto Rico for the five months to April, 2008 as a wholly-owned subsidiary. We have made advance provision for these losses in the unaudited financial statements for the quarter ended 29 February, 2008.
Joseph P. Esau
28 April 2008
Source:The Trinidad and Tobago Stock Exchange Taken from: http://www.wisett.com/home/news.php?id=1017