The really interesting bit of this is not the loan of itself but within the RNS the declaration that the carrying value of the hotel in the books is £144.1m, but the refinancing valued it as £370m. i.e. the property is worth over 250% of its book value.
Clearly this level of revaluation will not apply to all PPHE properties. Particularly the more recent ones. But I do think it gives strong support for any asset backing valuation of the company and strong support for the PPHE annual report for year ended 31/12/15 which stated fair value was €507m above book. The Park Plaza alone is now £225.9 = €286m above its carrying value.
Now there are complications with PPHE in that it is controlled by the Papouchado family through the Red Sea Group (www.redseagroup.com) and I am not entirely convinced that all the refurbishment and building work done for PPHE is entirely at arms length. It is done by the Gear Group, also controlled by the Papouchado family via the Red Sea Group. But given its strong asset backing any investment in it remains low risk and asset backed.
Mkt Cap of the company is currently £333m. With a balance sheet at 31/12/15 of €365 = £287m. But with £399m (€507) of unrealised property values (probably higher with the Park Plaza Westminster Bridge revaluation) I think this business is significantly undervalued.
I currently have a long term price target on PPHE of 1250p. But always DYOR.
I already have a position but am intending to add next week.